Home First Finance Company (HFFC) IPO Details

In the ongoing bull market, and after a roller coaster ride of 2020, investors are seemingly excited about the IPOs that will be coming their way this year. And well, encashing this positive trend, a lot of companies are or will be coming up with their IPOs this year. 

Next in line of the long upcoming chain of IPOs of 2021 is the IPO of a Mumbai based housing finance company; Home First Finance Company India Limited (HFFC). The company is one of the fastest-growing in the mortgage lending segment. 

HFFC's IPO was delayed due to the pandemic, but now, after the market has apparently picked up on its bull run again, the IPO will open for subscription from January 21 till January 25 with a price band at Rs 517-518 each of the face value of Rs 2 each.

This is the third IPO of 2021, after IRFC and Indigo Paints. The issue size of the IPO is Rs. 1153.72 crores, which includes Rs 265 crore fresh issue and Rs 888.72 crore offer-for-sale (OFS) by promoters and current shareholders.

The IPO will allow current shareholders True North, GIC, Bessemer Venture Partners together with founder PS Jayakumar to partially exit their investments.

KFin Technologies Pvt Ltd is the registrar of the IPO.

Let's get into the company details and analyze the investment prospects. 

About Home First Finance Company (HFFC)

Home First Finance Company is an affordable housing finance company, headquartered in Mumbai, India. The company mainly serves the low and middle-income people by advancing them to affordable housing loans. Furthermore, it provides additional loans like mortgage loans, developer finance loans, and loans to purchase commercial property.

The company has a varied lead generation source medium comprising connectors, contractors, architects, affordable housing developers, and others. As of March 31, 2020, the company has its presence in 11 states and 1 union territory of the country with an association of 70 branches across 60 districts with a significant presence in markets like Karnataka, Maharashtra, Gujarat and Tamil Nadu.

The firm presently emphasizes on leveraging technology assistance in aspects such as processing loan applications, risk management, and managing customer experience. It advances quick and transparent loan dealings via its mobile app. It has serviced a total of 44,796 active loan accounts as of September 30, 2020. 

HFFC has expanded its Asset Under Management (AUM) from Rs 2,443.57 Crores in the previous year to Rs 3,618.36 crores as of March 31, 2020, with a record growth of 48.1%. This growth has originated mostly from growth in the markets of Bangalore, Chennai, Hyderabad and Jaipur; which have increased by 78.7% from last year.

Competitive Strength of the company

• A technology-driven company with robust operating model.
• Customer-centric work model.
• Huge incursion in the housing finance market segment, with differentiated sourcing networks.
• The underwriting process is centralized and backed by data-science.
• Robust collections system with the use of modern technology.
• Well-Diversified and economical financing outline.
• Proficient management team with competent operational workforces and marquee financiers.

Financial Performance of the company

Future Strategies of the company

• Using technology to expand the business and increase operational efficiency.
• Enlarge branch network in big reasonable housing markets.
• Increase the output of its prevailing branches.
• Expand sources of borrowings to enhance borrowing expenses.
• Emphasis on augmenting its risk management structure.

HFFC IPO details

HFFC IPO Tentative Timetable

Who can bid how much?

Equal to 50 per cent of the IPO issue will be set aside for Qualified Institutional Buyers (QIBs); whereas 35 per cent of the issue will be reserved for the retail investors; and 15 per cent of the issue is for the Non-Institutional category. 

The objective of the IPO

• To attain share listing advantages on the stock exchange.
• To enlarge the company's capital ground to encounter future capital necessity.

Home First Finance IPO Lot Size

Risk Factors

• Disturbance in the sources of funding could adversely influence its business.
• NPAs can negatively affect company business.
• Volatility in interest rates in both lending and treasury processes could impact the profitability of the company.
• In the event of a credit rating agency downgrading the company's credit ratings, it would surge the company borrowing expenses, and this could affect the profitability.
• The company depends immensely upon its IT Systems, and any malfunction or security breach on this system can impact the company's business.
• Company may confront asset-liability disparities which can impact its liquid assets and profitability.
• Company is majorly concentrated in Gujarat and Maharashtra. Any unfavourable events in these states can dramatically impact the business.

HFFC IPO Lead Managers

• Axis Capital Ltd
• Credit Suisse Securities (India) Pvt Ltd
• ICICI Securities Ltd
• Kotak Mahindra Capital Company Ltd

Closing Words

HFFC is one of the fastest-growing mortgage lenders in the country. It has shown healthy growth capabilities in the last few years. 

Considering all possible factors and important details surrounding the company and its IPO, investors can decide on whether to apply in the IPO for listing gains.

As advised always, investors must check all possible strengths and risks or pros and cons associated with the company and analyze its growth prospects, and then make a mindful decision about investing in it.