Thread by @MarketLearner_

Home First Finance Company #Q2FY23 #Earnings update.

#StockMarket #Stocks #stock #investing

@TheFactFindr @KommawarSwapnil @kuttrapali26 @harrie007 @caniravkaria @Ishan_Narayan_ @kaushaldarshan_ @josephseby78 @mishika_chamria @mystock_myview @StocksTreasures @chartbent

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First, lets talk about the company🏢🏢

👉They are a tech driven affordable housing co supported by centralized underwriting & in-depth understanding of local properties having pan-India presence.

👉They provide home loans to 1st time buyers with focus on salaried individuals having monthly income of < Rs 50k

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👉The company's customer profile consists of salaried individuals (71% of loans, including informal class) and non-salaried (29% of loans).

👉Home loans accounted for 89% of the book in Q2FY23.

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Now, lets talk about the Q2FY23 results💰💰

👉The company had record high disbursements in Q2FY23. Management expects the same to increase by 5% qoq for the rest of FY23.

👉High opex & strong loan book growth was seen. Asset quality continued to improve.

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👉Bounce rates spiked sequentially as customers preferred to pay via UPI while allowing NACH mandates to fail. But payments were made within 1-3 days of EMI presentment

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

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👉Strong on ground demand momentum was seen. There was marginal improvement in reported spread due to repricing of loans by 25 bps from July.

👉Management expects another hike in lending rate & spread to maintain at 5.5-5.6% for rest of FY23 & 5.25% over long term.

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👉Expect the company's AUM to grow by around 32% CAGR over the medium term with NR growth of 26%, PPoP growth of 23% & PAT growth of 21% over FY22-24.

👉Expect RoA of 3.9% & RoE of 14.9% by FY24.

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Now, lets have a look at the key risks involved🔴🔴

👉Significant AUM concentration is noted in Gujrat (nearly 34% of AUM).

👉Higher than expected slippages from the early buckets.

👉In a rising interest rate scenario, stiff competition by new entrants in the AHF market can have some pressure on margins & profitability.

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