Home First Finance Company India (HOMEFIRS IN) – Company Initiation – Backing the Talos^ of affordable housing – BUY
Published on 23 Feb 2026
We initiate coverage on Home First Finance Company (HOMEFIRS) with ‘BUY’ rating and TP of Rs1,375 at 2.6x FY28E P/ABV. HOMEFIRS has demonstrated robust AUM growth of 29% CAGR over FY20-25. We expect the trajectory to continue and AUM to grow by ~24% CAGR over FY25-28E aided by deeper geographic expansion in existing and new markets. Investments in technology, connector model of sourcing, and centralized control over underwriting underpin scalability of the business model and justify a premium over peers. Despite rising competition and higher BT-outs, HOMEFIRS has been able to maintain steady yields. We expect spreads to remain in the guided range of 5.0%-5.2%. While credit cost has been elevated (40bps in Q3FY26) due to challenges in the MFI/ MSME segment, we expect it to normalize in FY27/ FY28E. The stock has seen significant correction (trading below -1 SD). Our valuation at 2.6x FY28E P/ABV accounts for a 20% discount from 5-year average (3.3x). Initiate with ‘BUY’.
