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Home First Finance Company India Ltd IPO

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Home First Finance Company India Ltd. is an affordable housing finance company that caters to the low and middle income groups by offering them home loans to construct and buy homes. It further offers other loans like developer finance loans, loans against property and loans to buy commercial property.

Offer Details:

The total issue size is ₹1,154Cr which consist of Fresh Issue of ₹265Cr and Offer for sale of ~1.72Cr shares aggregating to ₹889Cr at the upper end of the price band. The net proceeds from the fresh issue is proposed to be utilized towards augmenting HFFC’s capital base to meet future capital requirements.


% Shareholding

Pre-offer

Post-offer

Promoter Group

52.85

33.70

Public

47.15

66.30

Total

100%

100%

Post Issue percentage is at upper price band 


Objects of the Issue:
  • To augment company's capital base to meet future capital requirement
  • To achieve share listing benefits on the exchange

Initial Public Offer of up to (*) equity shares of face value of Rs. 2 each (equity shares) of Home First Finance Company India Limited (company) for cash at a price of Rs. (*) per equity share (including a share premium of Rs. (*) per equity share) (offer price) aggregating up to Rs. 1500 Crores comprising a fresh issuance of up to (*) equity shares aggregating up to Rs. 400 Crores by the company (fresh issue) and an offer for sale of up to (*) equity shares aggregating Up to Rs. 1100 Crores comprising up to (*) equity shares aggregating up to Rs. 498.40 Crores by True North Fund V LLP (tn v llp), up to (*) equity shares aggregating up to Rs. 332.2 Crores by Aether (Mauritius) Limited (aether and together with tn V LLP, the promoter selling shareholders), up to (*) equity shares aggregating up to Rs. 176.4 Crores by Bessemer India Capital Holdings II Ltd. (the investor selling shareholder), up to (*) equity shares aggregating up to Rs. 56 Crores by P. S. Jayakumar, up to (*) equity shares aggregating up to Rs. 35.9 Crores by Manoj Viswanathan and up to (*) equity shares aggregating up to Rs. 1.1 Crores by Bhaskar Chaudhry (P. S. Jayakumar, Manoj Viswanathan and Bhaskar Chaudhry, the individual selling shareholders, and together with the promoter selling shareholders and the investor selling shareholder, the selling shareholders, and such equity shares offered by the selling shareholders, the offered shares) (offer for sale and together with the fresh issue, the offer). The offer shall constitute (*)% of the post-offer Paid-up equity share capital of the company. The company may consider a private placement of up to (*) equity shares for cash consideration aggregating up to Rs. 160 Crores, at its discretion, prior to filing of the red herring prospectus with the roc (pre-ipo placement). If the pre-ipo placement is undertaken, the amount raised from the pre-ipo Placement will be reduced from the fresh issue, subject to the minimum offer size constituting at least 10% of the post-offer paid-up equity share capital of the company. The face value of equity shares is Rs. 2 each. The offer price is (*) times the face value of the equity shares. The price band and the minimum bid lot will be Decided by the company


Home First Finance Company India Ltd IPO Subscription Details

Company

Home First Finance Company India Ltd

Issue Type

Book Building

Issue Size

₹ 1,153.72 Cr

Lot Size

28 Equity Shares

Open Date

21 Jan

Close Date

25 Jan

Offer Price

₹ 517- 518

DRHP

Click here

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Particulars

FY18

FY19

FY20

1HFY21

Gross Loan Assets (₹Cr)

1,356

2,444

3,618

3,730

Disbursements (₹Cr)

746

1,573

1,618

296

Total Assets (₹Cr)

1,365

2,482

3,480

3,722

Total Income (₹Cr)

132

260

399

237

Net Interest Income (₹Cr)

64

127

198

122

PAT (₹Cr)

16

45

79

53

ROE (%)

9.8

10.7

10.9

11.3

ROA (%)

2.3

2.4

2.7

3.0

Cost to income ratio (%)

60.2

49.8

45.2

34.2

Gross NPLs as % of loans

1.2

0.9

1.0

0.7

Net NPLs as % of net loans

0.5

0.6

0.8

0.5

Source: RHP, 5paisa Research

Key Points

Small size, niche market sets it up for growth:

At ₹3,730 cr of AUM, HFFC has a huge growth runway ahead of it. Further, individual categories like LAP (₹190 cr) and developer loans (₹70 cr) are even smaller, providing HFFC a very low base to start with. Small size, strong parentage, low NPAs and a tier 1 CAR of 50.4% (with additional capital to be added through the IPO) would mean that HFFC will not find funding to be a constraint. At its current size, NHB funding would also provide a meaningful form of support.

Strong pricing power in its customer segment:

HFFC’s home loan yields at 12.9% are among the highest across listed peers. This is primarily due to focus on a customer base which is unserved/under-served and which faces difficulties in accessing credit at a quick TAT. Such a customer base provides HFFC healthy pricing power in a highly competitive market.
High core profitability and low credit costs set-up its strong RoAs:
 High growth, strong NIM (pricing power + free funds benefit due to high Tier 1 CAR), and operating leverage are contributing to PPoP RoAs at 4.2/5% as of FY20/1HFY21. As the COVID related provision phase passes, overall RoAs could be in the 3-3.5% range.

Key Risk Factor:

Untested customer base, informal income category:

The biggest risk for HFFC is that ~40% of its customer base is new to credit and therefore untested. Further, despite having 72.6% of its customers from the salaried segment, most of these are customers who lack formal income proofs. That is why a surrogate income assessment is needed. Therefore, unlike a typical salaried customer employed in the mid-income segment, these customers would be relatively risky due to the combination of being new to credit and being in the informal income category.

Structurally low RoE due to muted leverage: 

HFFC already has a 50.4% Tier 1 CAR and will be adding to this through the listing process. Given low risk weighted assets, the key RoE driver for HFCs is usually the leverage. Levering up the capital will take time and therefore, RoEs could hover at 12-13% in the medium term. 

Outlook & Valuation: 

While the pricing is a tad expensive at 3.4x 1HFY21 P/BV, we believe its strong metrics and high growth would lead to healthy EPS growth and therefore, healthy returns from the issue price.

How to apply IPO on 5paisa app?

  • Login to your 5paisa Mobile Trading App and select Home First Finance Company India Ltd IPO in the current IPO section
  • Enter the number of lots and price at which you wish to apply for
  • Enter your UPI ID and click on submit. With this, your bid will be placed with the exchange
  • You will receive a notification to block funds in your UPI app
  • Approve the block request

Home First Finance Company India Ltd IPO Frequently Asked Questions

Home First Finance, an affordable housing finance company is coming up with an initial public offering of ~1.72Cr equity shares of face value of ₹2 per equity share.

You can apply for the Home First Finance IPO using any supported UPI apps. To Apply on 5paisa App follow the procedure mentioned above. For further details Click Here.

Home First Finance IPO will open on January 21, 2021.

Home First Finance IPO Lot size is 28 equity shares, that means you can apply for one lot consisting 28 equity shares.

Shares of Home First Finance will be getting allotted on 29th January,2021.

Home First Finance Shares will be getting listed on 03 February, 2021.

Here is the minimum investment calculation of Home First Finance IPO
Lot size – 28 * Issue Price ₹528 = ₹14,504
Hence the minimum investment amount required to invest in Home First Finance IPO is ₹14,504. As per the maximum limit that is allowed by SEBI you can apply for 13 lots.

No, one bank account one IPO application is allowed.

Cut off Price for Home First Finance IPO is ₹14,900


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Contact Details of Home First Finance Company India Ltd IPO

Company Contact Information

Home First Finance Company India Ltd IPO
511 Acme Plaza,
Andheri Kurla Road Andheri (E),
Mumbai, Maharashtra 400059.

Phone: 91-22-6694 0386
Email: corporate@homefirstindia.com
Website: http://www.homefirstindia.com/

Home First Finance Company India Ltd IPO Register

KFin Techologies Pvt Ltd

Home First Finance Company India Ltd IPO Lead Manager(s)

  • Axis Capital Ltd
  • Credit Suisse Securities (India) Pvt Ltd
  • ICICI Securities Ltd
  • Kotak Mahindra Capital Company Ltd

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