Target: ₹1,350

CMP: ₹1,174

Home First Finance has delivered a strong 33 per cent assets under management (AUM) CAGR between FY21–24 and 23 per cent FY25–YTD growth. In parallel, by Dec’24, RoE expanded to 16.6 per cent, from sub-10 per cent in Mar’21; thus, reflecting strong profitability aided by business agility and superior execution of business strategies by management.

With industry-wide tailwinds in place, such as re-introduction of CLSS scheme and likely rate cut cycle, Home First would likely sustain its growth momentum. The recent fresh capital infusion – to the tune of ₹1,250 crore – would ensure adequate capital to fund Home First’s aspirational AUM target of ₹40,000 crore by FY30, implying a about 27 per cent CAGR between FY24–30. CAR now stands at about 50 per cent vs. 33.1 per cent, as on Dec’24. We believe, near-term AUM growth would still remain in excess of 30 per cent.

With higher visibility of Home First sustaining its growth momentum and steady 15 per cent RoE by FY27E, we upgrade the stock to Buy (from Add) and revise our TP to ₹1,350 (vs. ₹1,075), valuing it at 3x Sep’26E BVPS (earlier 3.5x Sep’25E).

Key risks: Sourcing, collections managed by front-end team; and Lower-than estimated AUM growth. 

Published on April 16, 2025