HDFC Securities lifts Home First Finance rating
HDFC Securities has upgraded Home First Finance Company India Ltd. from “Reduce” to “Add,” setting a revised target price of ₹1,250, which equals about 2.3 times the September 2028 forward price-to-book and roughly 15 times the projected EPS for that period.
The brokerage notes that loan growth slowed from roughly 35% to 25% year-on-year, prompting a valuation de-rating. However, recent disbursement growth has picked up, driven by the firm’s distribution initiatives and a rebound in demand.
Profitability remains largely intact, though return on equity has compressed because of a recent capital raise. The note expects RoE to improve as leverage rises. The equity infusion, while diluting short-term returns, has strengthened the balance sheet and offers a cushion for loan growth, supporting the view that profitability stays robust.
Management is targeting an estimated 25% compound annual growth rate in assets under management for FY27-FY29, supported by higher distribution spending, gradual demand recovery, and broader geographic reach.
With about 84% of AUM tied to home loans, the lender has room to diversify its product mix. Co-lending, which currently accounts for under 5% of disbursements, is seen as a way to enlarge the addressable market.
Read Also: Drishyam 3 Opens Strong Hanuman Ansh Gains Later
This upgrade mirrors a broader trend where lenders that shift from rapid volume expansion to steadier, efficiency-focused growth see more favorable ratings. Such a pattern has emerged among non-bank lenders that balance growth with risk management.
Operating efficiency is projected to stay at current levels, with limited scope for further gains. Increasing leverage should lift RoE over the coming years.
Valuation has moved from a forward price-to-book multiple of 4.0 × to 2.3 ×, and the clearer growth visibility combined with steady profitability creates what the brokerage describes as a favorable risk-reward profile.
All figures and the rating change are detailed in the HDFC Securities research note on Home First Finance.
NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports give NDTV Profit’s subscribers an opportunity to deepen their understanding of individual companies, sector trends and the broader economy.
