The Rs 1,153 crore-initial public offering (IPO) of mortgage lender Home First Finance Company India Limited was subscribed 26.57 times overall as of 4 pm on Monday (January 25), the last day of bidding. The issue has received bids for 41.52 crore equity shares against an offer size of more than 1.56 crore shares, according to data available on the exchanges.
The reserved portion of retail investors has been booked 6.4 times and that of qualified institutional investors 52.5 times. Non-institutional investors have put in 39 times bids against their reserved portion in the IPO.
The company already raised Rs 346 crore from anchor investors on January 20 and the issue size has been reduced to 1.56 crore shares (or Rs 880 crore) after fund-raising from the anchor book.
This is the third public offering of 2021, after IRFC and Indigo Paints.
Home First Finance has set a price band of Rs 517-518 per equity share, with a face value of Rs 2 each. Investors can bid in lots of 28 shares and multiples thereof. After the issue, Home First Finance’s implied market capitalisation could rise between Rs 4,518 crore and Rs 4,527 crore.
The public issue comprises a fresh issue of Rs 265 crore and an offer for sale of Rs 888.71 crore by promoters True North Fund V LLP and Aether (Mauritius), investor Bessemer India Capital Holdings II Ltd, and two individual shareholders – PS Jayakumar and Manoj Viswanathan.
The company will utilise net proceeds from the fresh issue for augmenting its capital base to meet future capital requirements, arising out of the growth of business and assets.
Brokerage houses have assigned a ‘subscribe’ rating to the issue on the back of the company’s strong financials, stable asset quality, comfortable capital adequacy ratio and healthy return ratios.
“Despite the COVID-19 crisis, the company’s asset quality has remained largely stable with GNPA and NNPA largely stable at 0.7% and 0.5% respectively at the end of 1HFY2021. The company had a CAR of 51.7% at the end of 1HFY2021which provides comfort. At the higher end of the price band the stock would be trading at P/BV of 3.6x fully diluted post issue book value of Rs 143.4 per share,” Angel Broking said.
The brokerage firm expects the company to post strong growth driven by strong demand for affordable housing. Given the growth prospects, it recommends a ‘Subscribe’ rating on the issue.
Incorporated on February 3, 2010, Home First Finance is an affordable housing finance company that targets first time home buyers in low- and mid-income groups. It primarily offers customers housing loans for the purchase or construction of homes, which comprised 92.1 percent of gross loan assets, as of September 30, 2020. Gross loan assets have grown at a CAGR of 63.4 percent between FY18-20 and increased to Rs 3,730.01 crore as of September 30, 2020.
Home First has posted strong growth in NII of 58.6 percent CAGR between FY18-20 while net profits have grown at a CAGR of 122.6 percent during the same period.
Its net worth stood at Rs 988.2 crore as of 1H FY21. Home First Finance has a network of 70 branches covering over 60 districts in 11 states and a union territory in India, with a significant presence in the states of Gujarat, Maharashtra, Karnataka and Tamil Nadu.
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