Mumbai-based housing financier's stock jumps — analysts see 25% further upside on affordable segment

It expects Home First's earnings per share (EPS) to grow 24 percent over the four years ending March 2025, driven by strong profit growth and improving return on equity (RoE), which it believes should support a rerating.

The brokerage is positive on higher productivity at Home First. The company disburses 2-3 times loans by value per branch compared with its peers "as it targets urban peripheries with more concentrated demand, originates 72 percent of loans through third-party connectors and leverages tech (tech cost at 26 bps of loans higher vs peers) and centralised underwriting to reduce cycle time," Jefferies said.

The brokerage expects the company's earnings per share (EPS) to expand at 24 percent over the four years ending March 2025, driven by strong profit growth and improving return on equity (RoE) that it believes should support a rerating.

Home First reported a 21 percent increase in net profit to Rs 54.3 crore for the July-September period. According to a regulatory filing, its net interest income — or the difference between interest earned and the cost of servicing liabilities — rose 28.5 percent to Rs Rs 118.24 crore.

Net interest margin — a key measure of profitability for financiers —  improved by 130 bps to 6.5 percent. Its loan disbursals increased 36.3 percent to Rs 702.2 crore. 

Jefferies expects its net interest income to grow at a CAGR of 28 percent over the four years despite some margin pressure.

Its asset quality — measured as a percentage of bad loans in total loans — improved. Gross non-performing assets improved by 20 bps sequentially to 1.9 percent in the July-September period.

Home First Finance shares have lost almost 14 percent of their value in the past month, a period in which the Nifty benchmark has risen 6.4 percent.