Shift from 2012 to 2014

HOMEFIRST FINANCE IPO

(ZEE BUSINESS)

BASIC DETAILS ABOUT IPO  (21-25 January)
Price Band	517-518
Bid Lot	28
OFS (Amount)- AT  Upper Band	888.7
OFS (Shares)-  Cr	1.72
Fresh Issue- AT  Upper Band	265
Fresh Issue (Shares)-Cr	0.51
Total issue amount- AT Upper Band	1153.7
Post issue Implied Market Cap	4527cr
Post issue (Shares) Cr	8.74
Axis capital, Credit Suisse, ICICI securities and Kotak Investment banking

 

 

SHAREHOLDING
Particular	Pre-Issue	Post-Issue
Promoter	52.85%	33.70%
Public	47.15%	66.3%
Total	100.0%	100.0%

 

 

 

 

 

 

BASIC FINANCIALS (P&L)
(Amount in cr)	1HFY21	FY20	FY19	FY18
Revenue From Operation	237.1	398.6	259.9	132.1
Growth	28.9%	53.4%	96.7%	-
NII	96.1	160.9	105.4	64
Growth	40.1%	52.7%	64.7%	-
NIM	5.4%*	5.4%	5.5%	5.3%
PAT Margin	22.3%	19.9%	17.4%	12.1%
Employee expense % of RFO	12.6%	15.3%	16.6%	19.0%
Impairment of Financial instrument % RFO	6.9%	4.1%	2.8%	2.2%
Other expenses % of RFO	4.8%	8.5%	9.3%	10.3%

 

 

 

 

 

 

 

 

 

*Annualised (2.7%*2)

BASIC FINANCIALS (Balance sheet & Cash Flows)
(Amount in cr)	1HFY21	31.03.20	31.03.19	31.03.18
Cash/bank balance	420.9	222.0	192.0	30.2
% of Total assets	11.3%	6.4%	7.7%	2.2%
Loans	2972.2	3013.9	2134.7	1308.7
% of Total Assets	79.9%	86.6%	86.0%	95.9%
Borrowings	2397.1	2493.8	1925.6	1019.8
% of Total Assets	64.4%	71.7%	77.6%	74.7%
Debt Security	239.5	0	0	0
% of Total Liabilities	6.4%	0%	0%	0%
Total equity	988.2	933.6	523.1	325.2
% of Total Liabilities	26.5%	26.8%	21.1%	23.8%
Loans/(Borrowing+Debt Security)	1.13	1.21	1.11	1.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PEERS

There are more than 35 companies who are into Affordable housing finance segment whose average ticket are less than 15lakh, Among them the one currently listed player is AAVAS Financiers ltd .

 

 

Particular	AUM CAGR growth from FY15-FY20	AUM FY20 Cr	PAT Margin	Revenue (FY20)	PE	PB	ROE	Disbursement Per Branch (FY20)	Disbursement Per Employee (FY20)	NII growth FY18-20
Home First Finance	61%	3600	19.9%	398.6	49.2	4.3	10.9%	25.3cr	2.4cr	1.5x 64 to 161
AAVAS Financiers ltd	56%	7800	27.6%	903	61.4	7.3	12.7%	12.7cr	0.8cr	81% 301 to 546

 

(JFI)

In Jan 2019 GRUH Finance was merger with BandhanBank , GRUH Finance had an AUM of 15600cr , Valuation of GRUH Finance at that time was

PB 13.5

PE 51.5

 

FINANCIAL

·         Company’s Spread rose from 4.4% to 4.7% from FY18 to FY19 that is 0.3%, But profitability rose from 12.1% to 17.4% , While PBT-Other Income margin also rose from 16.7% to 20.8% which shows company has performed operationally efficiently.

·         The rise is contribution of reduced employee cost as % of Revenue from 18.9% to 16.6% (i.e. 2.3% benefit) and reduced other expense as % of Revenue from 10.3% to 9.3% (1% benefit) so in total around 3.3% benefit from these two parameters.

·         From FY19 to 1HFY21 continuously  reducing employee cost signifying company aiming at optimum utilization and also no significant addition in number of employees during that tenure.

Particular/Year	1HFY21	FY20	FY19	FY18
PAT Margin	22.3%	19.9%	17.4%	12.1%
PBT Margin	29.7%	26.9%	25.1%	18.4%
(PBT-Other Income) Margin	27.1%	21.6%	20.8%	16.7%
Employee cost % Revenue	12.6%	15.3%	16.6%	18.9%
Other expenses % Revenue	4.8%	8.4%	9.3%	10.3%
Tax rate	24.8%	26.1%	30.7%	34.1%
Spread	4.4%	4.5%	4.7%	4.4%
Employee Number	675	696	675	382
Disbursement/branch (in Cr)	4.3	25.3	30.8	19.1
Disbursement/Employee (in Cr)	0.4	2.36	2.98	2.56

 

 

 

 

 

 

 

 

PRO’s

·         Affordable housing finance industry is expected to grow at a CAGR of 9-10% till FY23 and government thrust on Affordable housing segment is positive for the entire industry.

·         Company has 70 branches in 11 states and union territory and those 11 states and union territory account for around 79% of affordable housing market in india.

·         Revenue grew from FY18 to FY20 from just 132cr to 399cr i.e. rose by 3x while PAT rose during the same time from 16cr to 79cr i.e. rose by 4.9x . PAT margin rose 12.1% to 19.9% while GNPA and NNPA stands just around 0.9% and 0.8% in spite the growth.

·         Based on Peer comparison apart from Profit Margin ,company have been performing good in many parameters like Disbursement per employee, Disbursement per branch, NII growth, AUM CAGR growth all seems better  and based on it PE and PB seems to be valued at discount.

 

Particular	AUM CAGR growth from FY15-FY20	AUM FY20 Cr	PAT Margin	Revenue (FY20)	PE	PB	ROE	Disbursement Per Branch (FY20)	Disbursement Per Employee (FY20)	NII growth FY18-20
Home First Finance	61%	3600	19.9%	398.6	49.2	4.3	10.9%	25.3cr	2.4cr	1.5x 64 to 161
AAVAS Financiers ltd	56%	7800	27.6%	903	61.4	7.3	12.7%	12.7cr	0.8cr	81% 301 to 546

 

·         Company’s management have good experience who have worked with HDFC Standard Life Insurance Co. Ltd, been associated with RBI, Unit trust of India etc.

 

CON’s

·         Company operates in a highly competitive industry  there are more than 35 companies who are into Affordable housing finance segment whose average ticket are less than 15lakh.

·         Company’s customers are primarily low and middle-income groups, Company witnessed around 10.5% bounce rate in Q4FY20 and around 28.3% during Q2FY21 which may lead to increased NPA’s  also As of 30 Sep 2020 73.1% of company’s Gross Loan Assets were from salaried customers and during pandemic salaried class was especially adversely affected.

(Company in interview to ET Now told however they don’t  Forsee any significant NPA’s and normalcy has started)

·         Company got incorporated in 2010 so not as such a long history.

 

ANCHOR BOOK

33.37% of Anchor Book is subscribed by 5 domestic Mutual Funds namely Sundaram,ICICI Prudential, AdityaBirla,Nippon Life &MotilalOswal

 

NOMURA around 9.5%

CLSA GLOBAL market 5.8%