Motilal Oswal Maintains Buy Rating on Home First Finance, Targets Rs 1350

Motilal Oswal Recommends Buy on Home First Finance

Home First Finance, a key player in the affordable housing finance company (HFC) segment, has historically demonstrated robust growth driven by its strong presence in low-tier cities, expertise in lending to informal income profiles, and relatively low competitive intensity. However, in recent times, growth in the segment has moderated due to various factors, including increased participation from banks and other financial institutions, particularly in higher-yield secured lending segments.

The company's performance is expected to be impacted by multiple risks, including the spillover of microfinance institution (MFI) stress to affordable housing demand, weakness in the micro, small, and medium enterprises (MSME) segment, and government-related disruptions in the southern markets.

Outlook and Recommendation

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Motilal Oswal's research team estimates that Home First Finance will deliver a compound annual growth rate (CAGR) of approximately 23% in assets under management (AUM) over the fiscal years 2026 to 2028. Additionally, the team forecasts stable net interest margins (NIM) of 6.1% and 5.9% in the fiscal year 2027 and 2028, respectively, as a percentage of average AUM.

Based on these estimates, Motilal Oswal recommends a BUY rating on the stock with a target price of INR1,350, premised on a price-to-book value (P/BV) multiple of 2.5 times the estimated book value for the fiscal year 2028.