Home First Finance Company India Limited — Q4 FY25 earnings call

Call held 2 May 2025

Management summary

Home First delivered a strong finish to FY25, characterized by robust 31% AUM growth and stable asset quality. The company successfully executed a significant capital raise of ₹1,250 crores, which provides a long runway for growth but will temporarily dilute ROE. Management remains confident in maintaining spreads above 5% and achieving an AUM of ₹20,000 crores by FY27.

Highlights

  • Assets Under Management (AUM) reached ₹12,713 crores, growing 31.1% YoY and 6.4% QoQ.

  • Full-year PAT stood at ₹382 crores (up 25% YoY), with Q4 PAT crossing the ₹100 crore milestone at ₹105 crores.

  • Successfully raised ₹1,250 crores via QIP in April 2025, issuing 1.3 crore equity shares.

  • Asset quality improved with 1+ DPD at 4.5% (down 30bps QoQ) and 30+ DPD at 3.3% (down 10bps QoQ).

  • Net Interest Margin (NIM) for Q4 expanded by 20bps QoQ to 5.1%.

  • Return on Equity (ROE) for Q4 FY25 touched 17%, while full-year ROE was 16.5%.

  • Disbursements for FY25 were ₹4,805 crores, up 21.2% YoY, meeting annual guidance.

Key financials

  1. AUM ₹12,713 Cr +31.1%YoY
  2. PAT ₹382 Cr +25%YoY
  3. NIM 5.1% +4%QoQ
  4. Gross Stage 3 Assets 1.7% 0%QoQ
  5. ROE 16.5%
  6. Cost of Borrowing 8.4% 0%QoQ

What they filed

Q1 FY27: revenue up 18.5%, net profit up 34.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue373 406 415 454 477 +28%482 +19%501 +21%538 +19%
Net profit92 97 105 119 132 +43%140 +44%149 +42%160 +34%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentAUM ShareNPA
Home Loans85%1.9%
Loan Against Property (LAP)15%1.3%

Guidance & targets

Volume

  • AUM Volume · FY27 · High confidence ₹20,000 crores
    No, we are fairly confident of achieving the Rs. 20,000 crores mark in the next 2 years.

    — Manoj Viswanathan, MD & CEO

  • Disbursement Growth Volume · FY26 · High confidence 20%+
    Disbursement growth, we are targeting it on 20%+; somewhere in the range of 20% to 25% is what we are looking at for disbursement growth.

    — Manoj Viswanathan, MD & CEO

  • AUM Volume · FY30 · Medium confidence ₹35,000 crores
    Overall, we seem to be on track to achieving those numbers [Rs. 35,000 crores AUM as guided for FY30].

    — Manoj Viswanathan, MD & CEO

Margin

  • Spread (ex-colending) Margin · Medium-term · High confidence 5% to 5.25%
    Spread is going to be in that 5% to 5.25% range that we have guided.

    — Nutan Gaba Patwari, CFO

Profitability

  • ROE Profitability · next 6 to 7 quarters · Medium confidence 15%+
    Our first milestone is to get to 15%+, which is in about 6 to 7 quarters from now.

    — Nutan Gaba Patwari, CFO

Other

  • Credit Cost Other · Annual · High confidence 30 to 40 bps
    We maintain our conservative annual credit cost guidance of 30 to 40 bps.

    — Manoj Viswanathan, MD & CEO

Risks & concerns

  • Regulatory Change in Co-lending

    medium

    RBI draft guidelines omit 'Model 2' co-lending; switching to Model 1 would require simultaneous disbursal, making the process operationally tedious.

    Management acknowledged

  • Competitive Intensity from PSU Banks

    medium

    Management noted increased activity and aggressiveness from nationalized banks in the mortgage space during March.

    Both acknowledged

  • Short-term ROE Dilution

    low

    The ₹1,250 crore QIP will cause an 'optical reduction' in ROE, taking 6-7 quarters to return to the 15%+ target level.

    Management acknowledged

Areas of evasion (1)

  • Slightly vague on the exact 'tediousness' of Model 1 co-lending beyond logistics.

Q&A highlights

2 direct
Sustainability of Spreads Direct
Correct. 5% plus we should be able to maintain because it is a floating rate book. If we are going below 5%, we will transmit that difference to the customer.

Confirms management's ability to protect margins in a declining interest rate environment through pricing power.

Asked by Renish, ICICI Securities

Asset Quality of LAP vs Home Loans Direct
LAP is around 1.2% - 1.3% NPA and home loan is about 1.9%... because we have a lower proportion of LAP, our teams have the luxury of selecting better customers.

Reveals a counter-intuitive trend where the perceived 'riskier' LAP segment is performing better than the core home loan book due to selective underwriting.

Asked by Divyansh Gupta, Latent Advisors

Impact of RBI Draft Guidelines on Co-lending Partial
Till now, we were following the co-lending model 2, but the draft guidelines do not have mention of that co-lending model 2... If it is as per model 1, then it is a little tedious from a logistics perspective.

Highlights a potential regulatory risk that could increase operational friction in the co-lending business, which management aims to scale to 10% of disbursements.

Asked by Nidhesh, Investec

2 min read 5 chapters

Detailed narrative

Strategic Capital Infusion via QIP

In April 2025, Home First successfully raised ₹1,250 crores through a Qualified Institutional Placement (QIP), issuing 1.3 crore equity shares. This capital infusion significantly strengthens the balance sheet, bringing proforma net worth to ₹3,751 crores and reducing proforma leverage to 3.3x. While this provides a growth runway for approximately 4 years, it will temporarily dilute ROE, with management targeting a return to 15%+ within 6-7 quarters.

Asset Quality Resilience and Underwriting

Asset quality showed sequential improvement, with 1+ DPD declining 30bps to 4.5% and 30+ DPD improving 10bps to 3.3%. Gross Stage 3 assets remained stable at 1.7%. Interestingly, the Loan Against Property (LAP) segment reported lower NPAs (1.2-1.3%) compared to the core home loan book (1.9%), which management attributes to highly selective underwriting in a segment that remains a small portion (15%) of total AUM.

Margin Sustainability in a Changing Rate Cycle

Despite rising bank MCLR, Home First maintained a competitive cost of borrowing at 8.4%. Q4 NIM expanded to 5.1%, aided by better liquidity management. Management is confident in maintaining spreads between 5% and 5.25% over the medium term, citing their fully floating rate book which allows for the transmission of rate changes to customers.

Network Expansion and Productivity

The company expanded its reach to 361 touchpoints and 155 branches across 13 states. During FY25, they added 22 branches and 385 employees, bringing total headcount to 1,634. Management expects to continue expanding the branch network by 20-30% annually, with 75% of future growth coming from existing branches and 25% from new locations.

Regulatory Headwinds in Co-lending

Management highlighted potential friction from new RBI draft guidelines that omit 'Model 2' co-lending. Home First currently operates under Model 2, and a forced shift to Model 1 would require simultaneous loan disbursal by both the HFC and the bank partner. While management views the guidelines as beneficial for expanding the addressable market, they noted the Model 1 process is operationally 'tedious' compared to their current workflow.

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