About Home First Finance
(i) Founded in the year 2010, Home First Finance is the technology-driven home finance company that typically targets first time home buyers in the low and middle-income groups. 91% of the total loan book is given to purchase or construct a house.
(ii) Home First Finance targets salaried and self-employed customers and these two comprises of 72.6% and 24.6% of the loan book, respectively. As on 30.09.2019, it has 37,086 active loan accounts with 3133 Cr of Gross loan book. The average ticket size of the loan is 10.2 Lakh.
(iii) They also offer other types of loans comprising loans against property, developer finance loans, and loans for the purchase of commercial property; however, it comprised only 4.7%, 2.8%, and 1.1% of total Gross Loan Assets.
Presence
As on 30.09.2019, Home First Finance has a network of 65 branches covering over 60 districts in 11 states and a union territory in India, with a significant presence in urbanized regions in the states of Gujarat, Maharashtra, Karnataka, and Tamil Nadu.
The company over the years has expanded into those territories where there is a demand for home buyers. Before setting up a new branch in a district, they conduct an in-depth study of the micro markets around the branch to assess the potential demand for housing finance and target regions with increasing urbanization and housing demand.
| State | Branches | districts | Loan |
| Gujarat | 19 | 10 | 40.50% |
| Maharashtra | 13 | 13 | 24.60% |
| Tamilnadu | 9 | 8 | 9.20% |
| Karnataka | 4 | 1 | 8.80% |
| Rajasthan | 6 | 4 | 4.50% |
| Telangana | 3 | 2 | 4% |
| Madhya Pradesh | 5 | 3 | 3.20% |
| Uttar Pradesh | 1 | 3 | 2.40% |
| NCR | 1 | 10 | 1.20% |
| Chhattisgarh | 1 | 3 | 0.90% |
| Andhra Pradesh | 3 | 3 | 0.80% |
Underwriting and Risk Management
The company has leveraged technology to process the loan and to manage the risk. They have developed a paperless process of the loan disbursement and they have a dedicated sales team who goes to buyer home and ensure minimal disruption to customer daily routine while disbursement of the loans.
For underwriting, Home First Finance is utilizing proprietary machine learning customer scoring models for a centralized credit underwriting process, which has led to consistent and accurate credit evaluation with quick turnaround time.
They digitally capture over 100 data points of a customer in addition to credit bureau data, observations of the front end teams, and feedback from the underwriting and management teams. They capture and store all the data on a cloud services platform. They have entered into arrangements with third-party service providers through whom they obtain additional information such as fraud-related data, banking, investment and taxation related data, and vehicle ownership of customers, which enables Home First Finance with underwriting and to identify areas of concern and take quick and accurate decisions.
Borrowing Profile
To disburse loans one needs money. Let us see how Home First Finance has borrowed money over the years.
As on 30.09.2019, the company has outstanding borrowing of 2295 Cr. They mostly borrow from the private banks, public banks, NHB (National Housing Board), a subsidiary of RBI, and through assignment transactions. 37% of borrowing is from NHB.
Credit rating is the most important parameter which all analysts should look carefully at. The highest credit rating means the company is serving its principal and interest on time. The highest credit rating is not only good for the lending institutions but also for shareholders of the company.
As on 30.09.2019, Home First Finance currently has an ‘A+ (stable) rating from ICRA Limited.
Founders and Investors
The Company was founded by Jaithirth Rao, P. S. Jayakumar, and Manoj Viswanathan in August 2010. The company is managed by professionals and the Promoters are True North Fund V LLP and Aether (Mauritius) Limited. Further, Bessemer has also invested in the Company.
IPO News
The company has already filed for an IPO and got the approval from SEBI in the month of March-2020.
Marketing Video of Home First Home Finance
| Total Available Shares: | 1000 |
| Face Value: | ₹ 2 Per Equity Share |
| Lot Size: | 100 Shares |
| Current Unlisted Share Price: | ₹ Best in Industry Per Equity Share |
| Name of the shareholder | Number of Equity Shares | % of Equity Shares |
| TN V LLP | 35997070 | 42.8 |
| Aether | 23998045 | 28.54 |
| Bessemer | 12744235 | 15.15 |
| P. S. Jayakumar | 4037775 | 4.8 |
| Manoj Viswanathan | 2363580 | 2.81 |
| Particulars (in Crores) | 6MFY20 | 2019 | 2018 | 2017 |
| Balance Sheet | ||||
| Loan Book | 3218 | 2134 | 1307 | 789 |
| Borrowings | 2295 | 1925 | 1019 | 663 |
| Share Capital | 156.6 | 126.68 | 103.23 | 103.21 |
| FV | 2 | 10 | 10 | 10 |
| Net-Worth | 889 | 523 | 325 | 306 |
| Book Value | 113 | 41 | 31 | 30 |
| P/L Statement | ||||
| Interest Income | 160 | 231 | 129 | 87 |
| Other Income | 33 | 39 | 5.2 | 4.5 |
| Interest Expended | 91 | 126 | 65 | 54 |
| Employee Expense | 30 | 42 | 24 | 14 |
| PBT | 50 | 65 | 24 | 10 |
| PAT | 36 | 45 | 15 | 6 |
| EPS | 4.60 | 5.75 | 1.92 | 0.77 |
| Key Metrics of HFC | ||||
| Loan Book | 3218 | 2134 | 1307 | 789 |
| NIM | 2.14% | 4.92% | 4.90% | 4.18% |
| GNPA | NA | 2.50% | 2.10% | 1.80% |
| CRAR | 47.60% | 38.50% | 43.00% | 68.50% |
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828, Sector 2B, Vasundhara, Ghaziabad, Uttar Pradesh, India 201012
Market Wizard
Website of Home First Finance:
https://homefirstindia.com/about/
Market Wizard
Know-how about the Founders of Home First Home Finance:
(i) Jaithirth (Jerry) Rao holds Master’s degrees in Business Administration from the IIM-Ahmedabad as well as the University of Chicago, US. He is a visiting faculty at both institutions. He has been honoured with the Distinguished Alumnus Award from the University of Chicago. He was also the Founder, Chairman and Managing Director of Mphasis during which time he was awarded the Ernst & Young Entrepreneur of the Year Award twice in 2001 & 2004, and the Karnataka State Rajyothsava Award in 2005. In the past, Mr. Rao has served as chairman of NASSCOM. He was with Citicorp for 20 years in various capacities, including the Head of Citibank where he was primarily responsible for building one of the bank’s Asian retail and credit card franchises, apart from working in various parts of the world. He has been an entrepreneur-in-residence at the Harvard Business School and lecturer at IIT, Bombay. He is on the Board of Trustees of the India Foundation of the Arts and of Sujaya Foundation.
(ii) P S Jayakumar is currently the MD and CEO of Bank of Baroda. He holds a master’s degree in Management from XLRI, Jamshedpur, a master’s degree in Commerce from the University of Madras, and is an Associate Member of the Institute of Chartered Accountants of India. He is also a Gurukul Chevening Scholar from the London School of Economics and Political Science (1998). Mr. Jayakumar started his career with Citibank in 1986 and has held many senior management positions there, including being country head for Consumer Business in India and Head for Consumer Lending Business in Asia Pacific. During his banking career, spanning 27 years, Mr. Jayakumar has contributed significantly to the development of the retail banking industry in India.
Market Wizard
Home First Finance was set up in 2010 by former Mphasis chairman Jaithirth (Jerry) Rao and former Citibank Consumer Banking Head PS Jayakumar.
The company had been growing at a compounded annual growth rate of over 50%.
It had raised capital from Bessemer Venture Partners (BVP) in 2010 and 2012, and from Alpha TC Holdings Pte Ltd, the private equity firm managed by Tata Capital Growth Fund, in 2013. The company recently raised f100 million dollar from True North Fund in 2017.
Market Wizard
Home First Home Finance has already filed for an IPO and got the approval from SEBI in the month of March-2020.