Prabhudas Lilladher Maintains Buy Rating on Home First Finance Company India, Targets Rs 1375

Home First Finance Company India

We initiate coverage on Home First Finance Company (HOMEFIRS) with a BUY rating and a Target Price (TP) of Rs1,375 at 2.6x FY28E Price-to-Asset-Based Value (P/ABV).

Key Highlights

• HOMEFIRS has demonstrated robust Assets Under Management (AUM) growth of 29% Compound Annual Growth Rate (CAGR) over FY20-25.
• We expect AUM to grow by ~24% CAGR over FY25-28E driven by deeper geographic expansion in existing and new markets.
• Investments in technology, a connector model of sourcing, and centralized control over underwriting underpin scalability of the business model and justify a premium over peers.

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Valuation

• Our valuation at 2.6x FY28E P/ABV accounts for a 20% discount from the 5-year average of 3.3x.
• The stock has seen significant correction, trading below -1 standard deviation (SD).

Outlook

• HOMEFIRS's unique technology-focused model, lean operations, and strong execution capability grant a premium valuation versus peers (FY28E P/ABV of 2.3x vs. 1.6x for AAVAS).
• We expect Return on Equity (RoE) to expand to ~14% by FY28E with Return on Assets (RoA) of 3.5% (earnings CAGR of 24% over FY25-28E).

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Recommendation

We initiate coverage with a BUY rating and a Target Price (TP) of Rs1,375.