Ventura Securities initiates coverage on this multibagger stock; see up to 50% upside

Domestic brokerage firm Ventura Securities has initiated coverage on Home First Finance Company (HFFC) as it believes that the company is poised for significant expansion in the Indian affordable housing finance sector. It sees up to 50% upside potential in the stock.

The industry, valued at Rs 33 lakh crore as of March 2024, accounts for 14% of systemic credit and has recorded a 13% CAGR from FY18 to FY24. Going forward, the sector is expected to grow at 15–16% CAGR through FY30, driven by rising demand in tier-II and tier-III cities.

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

Affordable housing finance companies have grown their loan books to Rs 9.6 lakh crore in 2024, constituting 32% of the total housing finance market. HFFC holds a 1% market share in this space, concentrating on small-ticket loans for affordable housing. India’s mortgage penetration is at 12% of GDP, notably less than the 20%+ seen in developed markets, the brokerage said.

HFFC’s assets under management (AUM) are forecast to grow at a 25.3% CAGR from FY25 to FY28, to reach Rs 25,037.2 crore. The company’s core housing loan segment is expected to remain the main engine, growing at a 24.6% CAGR and reaching Rs 20,584 crore by FY28, Ventura noted.

The loans against property (LAP) portfolio is projected to expand at a 29.3% CAGR to Rs 4,231 crore, while loans for commercial property purchase are set to grow at 24.6% CAGR to Rs 222 crore by FY28. Co-lending is anticipated to form 10% of total disbursements, as its AUM share rises to 5.9% by FY28, it said.

Home First Finance generates its income through interest on loans and advances, funded by a mix of private and public borrowings. The housing finance company also earns non-interest income from fees and commissions.

Disbursements are projected to increase from Rs 4,805.3 crore in FY25 to Rs 8,545.9 crore by FY28 at a 21.1% CAGR. HFFC also plans to expand its network to 268 branches, with its employee base expected to grow to 2,678 by FY28, it said.

Borrowings are predicted to compound at 22.8% CAGR, reaching Rs 17,163.8 crore by FY28 with a stable borrowing mix. Debt securities are also set for a 21.1% CAGR, reaching INR 5,064 crore. Net interest income is forecast to reach Rs 1,297.7 crore, with net interest margins (NIMs) expected to increase to 5.7% by FY28, Ventura noted.

Operating performance is projected to improve, with pre-provision operating profit (PPOP) rising 28% to Rs 1,122 crore and the PPOP margin expanding to 39%. The cost-to-income ratio is expected to moderate from 35.8% to 31.3%. Net income is forecast to grow at 26.8% CAGR to Rs 779 crore by FY28.

Shares of Home First Finance were listed in February 2021, when the company raised a total of Rs 1,153.72 crore via IPO by selling its shares for Rs 518 apeice. The stock is currently 150 per cent above its IPO price. The stock is nearly 14 per cent below its 52-week high at Rs 1,518.80, hit in July 2025.

"We have modelled conservatively for asset quality and increased GNPA by 22 bps to 1.9% by FY28, while maintaining PCR near the current (Q1FY26) level of 43%. As a result, NNPA should rise to 1.4% (+17 bps) by FY28 from the current 1.3% in FY25." The capital adequacy ratio (CRAR) is expected to sustain near 32.2%, while return on average assets (RoAA) could rise to 3.64% and return on average equity (RoAE) may decrease to 15% by FY28.

"We initiate coverage with a 'BUY' rating and a price target of Rs 1935 (3.8 times FY28E P/ABV), representing an upside of 50 per cent from the current levels over the next 24 months," said Ventura. "It bears the risk of interest rates falling leading to lower yields on the loans. Increase in delinquencies will increase credit costs and compress profit margin," it cited as key risks.