March 2, 2024

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Home First Finance ipo: Home First Finance IPO to open on Thursday: price band, grey market trend and other key details

3 min read
NEW DELHI: Home First Finance on Tuesday set the price band for its forthcoming IPO in the Rs 517-518 range. The Rs 1,153.71-crore IPO, which will open on Thursday, comprises of a fresh issue of Rs 265 crore, and an offer for sale of Rs 888.72 crore by promoters and existing shareholders. Its shareholders include True North Fund V LLP, Aether (Mauritius) and Bessemer India Capital Holdings II, besides certain individuals.

Investors can bid for a minimum of 28 equity shares and and in multiples thereafter. The IPO will close on Monday, January 25.

The HFC’s management, led by MD and CEO Manoj Viswanathan and CFO Nutan Gaba Patwari, will be addressing analysts later in the day. In the grey market, the scrip was commanding a premium of Rs 100 apiece.

Abhay Doshi, founder at UnlistedArena.com, said that the issue is asking a valuation of 38 times its annualised PE, which is moderate to fair given that its peer, Aavas Financiers, is trading at a multiple of 62 times.

“The company is mainly focused on Gujarat and Maharastra and is being seen having good growth prospects,” the grey market watcher said, suggesting a premium of about Rs 100 the scrip was commanding in the grey market.

Founded in 2010, Home First has presence in 60 districts across 11 states and a Union Territory with significant presence in the urban regions of Gujarat, Maharashtra, Karnataka and Tamil Nadu.

Home First targets first-time homebuyers, who typically are salaried customers working in small firms or are self-employed running small businesses. As of September 30, 2020, Home First had assets under management (AUM) of Rs 3,730 crore with a net worth of Rs 988 crore and gross non-performing assets of 0.74 per cent.

The company deploys proprietary machine learning and customer scoring models for underwriting, and delivers quick turnaround times to its customers.

Home First has seen a drop to 16 per cent this fiscal year mainly as loan disbursements came to a standstill in the first quarter due to the lockdown, having grown at an annualised rate of close to 50 per cent last fiscal year, ET reported.

Total loan book has since inched up to Rs 3,950 crore from Rs 3,600 crore at the end of March, it said.

“Our collection efficiency had fallen but is has now recovered to 96 per cent close to the 98 per cent pre Covid levels. About 24 per cent of our loans were under moratorium initially out of which only about 3 to 4% customers are still facing trouble, though we expect out gross NPAs to increase to 1-2 per cent of total loans up from 0.90 per cent pre Covid,” Viswanathan told ET.

The company, however, is confident of clocking 30 per cent growth rate next fiscal year led by higher disbursements. Loan disbursements, which had fallen to as low as Rs 51 crore in the quarter ended June, have improved to Rs 350 crore in the quarter ended December.

The IPO will allow existing investors True North, GIC and Bessemer Venture Partners, along with founder PS Jayakumar, to partially exit their respective investments, for the second time in less than six months.

In early October 2020, WP had invested Rs 700 crore in the company which included about Rs 625 crore of secondary sale by existing investors and a Rs 75-crore infusion into the company. WP is now the second largest shareholder in the company with a 25 per cent stake, behind True North’s 33 per cent.

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