Motilal Oswal Upgrades Buy Rating for First Finance to Target Price of Rs 1425

Home First Finance Reports Strong Growth in Q4FY26

Home First Finance, a prominent player in the financial services sector, has released its research report on the company's performance for the fourth quarter (4QFY26) and the fiscal year (FY26). The report highlights significant growth in key financial metrics, underscoring the company's strong performance.

In 4QFY26, Home First Finance's Profit After Tax (PAT) grew by 43% YoY to INR1.5 billion, meeting analysts' expectations. PAT for FY26 showed an impressive growth of ~41% YoY to INR5.4 billion. The company's Net Interest Income (NII) for 4QFY26 increased by 37% YoY to INR2.4 billion, in line with estimates. Other income also grew by 37% YoY to INR730 million. Operating expenses grew by 23% YoY to INR984 million, in line with estimates. Profit Before Tax (PPoP) rose by ~45% YoY to INR2.1 billion, in line with expectations. PPoP for FY26 grew by ~44% YoY to INR7.6 billion.

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The company's credit costs stood at INR158 million, which is 17% higher than estimated, resulting in an annualized credit cost of ~50bp. This is a significant increase from the previous quarter's ~47bp and the year-ago period's ~30bp.

The stock currently trades at ~2.6x FY27E Price-to-Book (P/B) multiple. The research report estimates a compound annual growth rate (CAGR) of ~23%/~18% in Assets Under Management (AUM)/PAT over FY26-28E. Additionally, the report forecasts a Return on Assets (RoA) of ~3.7% and a Return on Equity (RoE) of ~14.2% in FY28E.

Based on this analysis, the research report reiterates a BUY recommendation with a target price of INR1,425, based on 2.6x FY28E Book Value (BV).