HOMEFIRST - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.9
| Stock Code | HOMEFIRST | Market Cap | 11,663 Cr. | Current Price | 1,119 ₹ | High / Low | 1,519 ₹ |
| Stock P/E | 23.5 | Book Value | 386 ₹ | Dividend Yield | 0.33 % | ROCE | 11.4 % |
| ROE | 16.5 % | Face Value | 2.00 ₹ | DMA 50 | 1,131 ₹ | DMA 200 | 1,168 ₹ |
| Chg in FII Hold | 0.83 % | Chg in DII Hold | -1.23 % | PAT Qtr | 140 Cr. | PAT Prev Qtr | 132 Cr. |
| RSI | 49.8 | MACD | 14.6 | Volume | 1,30,105 | Avg Vol 1Wk | 22,48,490 |
| Low price | 839 ₹ | High price | 1,519 ₹ | PEG Ratio | 0.87 | Debt to equity | 2.40 |
| 52w Index | 41.2 % | Qtr Profit Var | 44.0 % | EPS | 49.4 ₹ | Industry PE | 16.7 |
💹 Core Financials: HomeFirst Finance shows moderate profitability with ROE at 16.5% and ROCE at 11.4%, reflecting average efficiency. Debt-to-equity ratio of 2.40 indicates high leverage, typical for housing finance companies. Quarterly PAT improved from ₹132 Cr. to ₹140 Cr., showing healthy growth of 44%. Dividend yield of 0.33% is minimal, offering limited income. EPS at ₹49.4 highlights steady earnings power.
📊 Valuation Indicators: Current P/E of 23.5 is higher than the industry average of 16.7, suggesting mild overvaluation. Book value of ₹386 against CMP of ₹1,119 implies a P/B ratio of ~2.9, which is reasonable for a financial services company. PEG ratio of 0.87 indicates fair valuation relative to growth prospects. Intrinsic value appears close to CMP, suggesting balanced risk-reward.
🏢 Business Model & Competitive Advantage: HomeFirst operates in affordable housing finance, focusing on underserved segments. Its competitive advantage lies in technology-driven processes, strong customer reach, and niche positioning in affordable housing loans. However, high leverage and dependence on interest rate cycles pose risks to profitability.
💰 Entry Zone Recommendation: Considering DMA 50 at ₹1,131 and DMA 200 at ₹1,168, the stock is trading slightly below averages, showing weakness. A favorable entry zone would be ₹1,050–₹1,100 during corrections. Current levels are fairly valued but not deeply undervalued.
📈 Long-Term Holding Guidance: HomeFirst remains a fundamentally stable company with growth potential in affordable housing finance. Long-term investors can hold cautiously, while new investors should wait for dips to improve risk-reward balance.
Positive
- ROE (16.5%) and ROCE (11.4%) reflect moderate efficiency.
- Quarterly PAT growth of 44% shows strong earnings momentum.
- PEG ratio of 0.87 indicates fair valuation relative to growth.
- Strong positioning in affordable housing finance segment.
Limitation
- Debt-to-equity ratio of 2.40 indicates high leverage.
- P/E ratio (23.5) is higher than industry average (16.7).
- Dividend yield of 0.33% offers negligible income.
- Stock trading slightly below DMA 50 and DMA 200 shows technical weakness.
Company Negative News
- Decline in DII holdings (-1.23%) signals reduced domestic institutional support.
- High leverage increases sensitivity to interest rate changes.
Company Positive News
- Increase in FII holdings (+0.83%) reflects foreign investor confidence.
- Quarterly PAT improved from ₹132 Cr. to ₹140 Cr.
- Strong demand outlook in affordable housing finance sector.
Industry
- Housing finance industry benefits from rising urbanization and government support for affordable housing.
- Industry P/E at 16.7 suggests peers trade at lower valuations.
- Competition from HDFC Ltd, LIC Housing Finance, and PNB Housing Finance keeps pricing pressure high.
Conclusion
⚖️ HomeFirst is a fundamentally stable company with growth potential in affordable housing finance. Valuations are slightly stretched compared to industry peers, and high leverage poses risks. Long-term investors can hold cautiously, while new investors should look for entry around ₹1,050–₹1,100 to optimize returns.
I can also prepare a peer comparison HTML snippet against LIC Housing Finance and PNB Housing Finance to highlight relative strengths and weaknesses if you'd like.