HOMEFIRST - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.9

📊 Core Financials:

- Quarterly PAT at ₹132 Cr vs ₹119 Cr previously → healthy growth (43% variation).

- ROCE at 11.4% and ROE at 16.5% → moderate efficiency.

- Debt-to-equity ratio at 2.40 → high leverage, typical for housing finance companies.

- Cash flows supported by lending operations, though dividend yield is low at 0.31%.

💹 Valuation Indicators:

- Current P/E: 26.5 vs Industry P/E: 18.0 → trading at a premium.

- P/B ratio: ~3.0 (₹1,155 / ₹388) → reasonable for financial sector.

- PEG ratio: 0.98 → fair valuation relative to growth.

- Intrinsic value appears close to CMP, suggesting balanced pricing.

🏢 Business Model & Competitive Advantage:

- HomeFirst Finance specializes in affordable housing finance, targeting underserved segments.

- Competitive advantage lies in technology-driven processes, strong customer focus, and niche positioning.

- Market cap of ₹12,002 Cr reflects growing relevance in housing finance sector.

📈 Entry Zone & Long-Term Guidance:

- CMP ₹1,155 is slightly below DMA 50 (₹1,176) and DMA 200 (₹1,189), showing mild weakness.

- RSI at 49.2 and MACD negative → neutral momentum.

- Suggested entry zone: ₹1,100–₹1,150.

- Long-term holding recommended due to growth potential in affordable housing, though leverage risk persists.

Positive

• Strong quarterly PAT growth (43%).
• PEG ratio of 0.98 indicates fair valuation relative to growth.
• FII holdings increased by 2.80% and DII holdings by 6.95%.
• Focused business model in affordable housing finance.

Limitation

• High debt-to-equity ratio (2.40) increases financial risk.
• Dividend yield at 0.31% is low.
• P/E of 26.5 is higher than industry average (18.0).

Company Negative News

• High leverage compared to peers.
• Stock trading below DMA levels, showing mild weakness.

Company Positive News

• Quarterly PAT improved from ₹119 Cr to ₹132 Cr.
• Strong institutional interest with FII and DII holding increases.

Industry

• Housing finance industry is growing with government support for affordable housing.
• Industry P/E at 18.0 indicates sector is moderately valued compared to HomeFirst’s premium pricing.

Conclusion

⚖️ HomeFirst Finance shows strong growth momentum and fair valuation metrics, supported by institutional interest. However, high leverage and premium P/E compared to industry peers pose risks. Entry is favorable around ₹1,100–₹1,150 for long-term investors, with potential for sustained growth in affordable housing finance.