Home First Finance Company India Ltd

Summary

Home First Finance Company India (HFFC) Q2FY23 Performance; Consistency remains same

About Company

Home First Finance Company Ltd. (HFFC) is a technology-driven affordable housing finance company, supported by centralized underwriting with in-depth understanding of local properties having pan-India presence. The company provides home loans to first-time buyers with prominent focus on salaried individuals having monthly income of

Journey so far:

Q2FY23 Performance

Disbursement & AUM

Operating Performance Q2FY23

Collection Efficiency:

Q2FY23 Performance

Home First Finance Company (HFFC) continued its trailblazing growth momentum in  Q2FY23, with record-high quarterly disbursements of INR 702cr. This resulted in AUM  growth of 36% YoY and 8% QoQ. Management expects disbursements to increase by 5%  QoQ for the rest of FY23. Net revenue (NR) exceeded our estimate by 3%, driven by strong  loan book growth. PPOP and PAT were marginally higher than our estimates driven by higher opex. 

Asset quality continued to improve, with GS-3 declining by 21bps QoQ to 1.93% and NS-3 down by 25bps QoQ to 1.43%. Among early asset-quality indicators, 1+dpd improved by 30bps QoQ to 4.7% and 30+dpd improved by 20bps QoQ to 3.3%. However, bounce rates spiked sequentially to 15.6% vs. 14.0% in Q1FY23, as customers preferred to pay via UPI while allowing the NACH mandates to fail. However, payments were made within 1–3 days of the EMI presentment, as reflected in the fall of 1+dpd numbers.

HFFC disbursed INR 702 Crs in Q2 which is our highest till date, with a growth of 6.2% on q-o-q basis and 36.3% on y-o-y basis.
• AUM at INR 6,275 Crs, grew by 7.6% on q-o-q and 35.9% on y-o-y basis.
• Portfolio health has improved further.
a. 1+ DPD reduced to 4.7% from 5.0% and 30+ DPD reduced to 3.3% from 3.5%.
b. GNPA reduced to 1.9% from 2.1%.
c. Profit After Tax at INR 54 Crs saw a growth of 25.9% on y-o-y basis.
d. ROE improved by 30 bps to 13.1% over Q1FY23.

Liquidity & Borrowinfg

The Company continue to have diversified & cost-effective long-term financing sources.
• During the quarter, we included Karnataka Bank & Yes Bank as our new banking partners and
we continue to work towards further diversification.
• We have a healthy borrowing mix with
a. 52% of our borrowings from Banks (Public sector 20%, Private sector 32%)
b. 21% from NHB Refinance and
c. 21% from Direct Assignment.
• We continue to have zero borrowings through Commercial paper.
• Our cost of borrowing is competitive at 7.1%, increase of 20bps from 6.9% on qoq basis. Our
marginal COB for Q2 FY23 was at 8.0%. During 1HFY23, we have not availed any new NHB
borrowing.

Capital

Our total CRAR is at 50.7% and Tier 1 CRAR is at 50.2%.
• Our Sept’22 Networth stands at 1686 Crs vis-à-vis Rs 1574 Crs as on Mar’22.
• Our quarter ROA stood at 3.8%.
• Our annualized ROE stands at 13.1% on Q2 numbers
• Our Book Value per share (BVPS) stand at INR 192.1 as on Sept’22

Yields, cost of borrowing and spreads

The increase in lending rates for higher ticket formal customers has an indirect impact on the
affordable segment as well. This increase in headlines rates makes affordable housing customers
less sensitive to the rates they have to pay and reduces the negotiations with customers at the
time of origination.
• Spreads continue at 5.8% due to slow transmission of increasing interest rates. As rates rise
spreads will move towards 5.25%.
• We have repriced the back book by 25bps effective Jul’22.
• On borrowing, we continue to focus on diversifying our funding sources with a competitive cost
of borrowing.

Management Guidance

Management reiterated its guidance of achieving 30% AUM CAGR and mid-teens RoE over the medium term.