Home First Finance IPO: Information Analysis

Home First Finance Company India Limited (HFFC) was incorporated in 2010. As its name suggests, the company is predominantly involved in providing home loans, with a focus on affordable housing. Promoted by private equity funds, it has a loan book of Rs 3,730 crore. With a network of 70 branches, the company currently operates in 11 states, which account for around 79 per cent of the affordable-housing finance market in India. Almost 80 per cent of its loan portfolio is concentrated in just four states (Gujarat, Maharashtra, Tamil Nadu and Karnataka), with Gujarat alone constituting almost 40 per cent to its portfolio. The company also offers construction finance, loans for purchasing commercial property and loans against property to both salaried and small business owners/self-employed customers. Strengths Focus on affordable housing: The company specifically focuses on customers in the middle- and low-income strata, with many of them being first-time borrowers. It assesses all income sources of a potential borrower, including those earned in cash, given that many employees may not necessarily be working in establishments that give salary slips or follow other documentation processes. This allows the company to get a holistic view of a borrower's true income and is, therefore, able to offer higher loan amounts. With an average ticket size of Rs.10.1 lakh, the company mainly focuses on the home-loan segment, which accounts for around 92 per cent of its loan book. Also, the company's preference for lending to salaried borrowers, who constitute around 73 per cent of its customers, improves its loan book's stability. Extensive use of technology: The company utilises technology considerably in its operations. Digital tools are used to make the data collection/customer onboarding processes faster and also make key decisions related to credit appraisal. By leveraging the company's IT systems, its centralised team is able to sanction loans within 48 hours. Even during the COVID-19-led national lockdown, the company's operations were largely unaffected, as employees seamlessly transitioned to working from home.