💰 Financial Performance

Revenue Growth by Segment

Total operating income grew by 33% YoY from INR 1,157 Cr in FY24 to INR 1,539 Cr in FY25. Assets Under Management (AUM) grew at a 3-year CAGR of 33%, reaching INR 12,713 Cr by March 2025, driven by retail affordable housing loans which comprise the majority of the portfolio.

Geographic Revenue Split

Revenue is concentrated in Western and Southern India, with Gujarat contributing 29% of AUM, followed by Maharashtra at 14% and Tamil Nadu at 13% as of March 31, 2025. The company is actively diversifying, with growth expected from Andhra Pradesh, Uttar Pradesh, and Rajasthan.

Profitability Margins

Return on Total Assets (ROTA) stood at 3.41% in FY25, a slight moderation from 3.76% in FY24 due to rising cost of funds. Return on Net Worth (RONW) improved to 16.24% in FY25 from 15.54% in FY24. Q2 FY26 ROA was reported at 3.8% with an adjusted ROE of 16.7%.

EBITDA Margin

Interest coverage ratio stood at 1.70x in FY25 compared to 1.80x in FY24. Pre-provisioning operating profit is supported by an improvement in Opex to Average Assets, which fell from 2.9% in FY24 to 2.6% in FY25 due to economies of scale from branch expansion.

Capital Expenditure

HomeFirst raised INR 1,250 Cr through a Qualified Institutional Placement (QIP) in Q1 FY26, which increased its net worth from INR 2,520 Cr in March 2025 to approximately INR 3,750 Cr. This capital is earmarked for AUM growth and maintaining a low gearing of 2.6x.

Credit Rating & Borrowing

The company's long-term bank facilities were upgraded to 'CARE AA; Stable' from 'CARE AA-; Stable' in June 2025. Cost of borrowing decreased by 30 bps QoQ in Q2 FY26, with management aiming to bring the portfolio cost of funds below 8% by March 2026.

⚙️ Operational Drivers

Raw Materials

The primary 'raw material' is capital/debt. The funding mix as of March 2025 consists of Bank Term Loans (60%), NHB Refinance (16%), Direct Assignment (14%), Co-lending (3%), and NCDs/ECBs (5%).

Import Sources

Capital is sourced domestically from 33 lenders including public and private sector banks, the National Housing Bank (NHB), and international sources like the U.S. International Development Finance Corporation (DFC) and IFC.

Key Suppliers

Key financial partners include the National Housing Bank (NHB), International Finance Corp (IFC) which provided INR 280 Cr for green housing, and the U.S. DFC which approved a $75 million loan for women borrowers.

Capacity Expansion

Current physical capacity includes 163 branches and 366 touchpoints across 143 districts in 13 states as of Q2 FY26. The company added 5 districts and 8 branches in the most recent quarter to deepen market penetration.

Raw Material Costs

Cost of funds is the critical cost driver; incremental borrowing is being secured at competitive rates, leading to a 30 bps reduction in borrowing costs in Q2 FY26. Spreads are maintained between 5.0% and 5.25%.

Manufacturing Efficiency

Operational efficiency is driven by technology; 91% of loans are approved within 48 hours. Digital adoption is high with 83% Account Aggregator penetration and 80% digital fulfillment through e-agreements.

Logistics & Distribution

Distribution is managed through a network of 1,723 employees and 163 branches. Opex to assets is maintained at 2.6%, reflecting efficient distribution of financial products.

📈 Strategic Growth

Expected Growth Rate

30%

Growth Strategy

Growth will be achieved by expanding the branch network in Tier 2 and Tier 3 cities across AP, UP, and Rajasthan, and increasing the co-lending contribution to 10% of disbursements. The company leverages a 'Phygital' model combining 163 physical branches with 96% app-registration among customers.

Products & Services

Affordable housing loans for the economically weaker and low-income segments, Loan Against Property (LAP) for commercial and business purposes, and Green Housing finance.

Brand Portfolio

HomeFirst (Home First Finance Company India Ltd.)

New Products/Services

Expansion of the co-lending business, which grew 179% YoY in Q2 FY26, and Green Home loans certified under the IFC partnership (240 homes to date).

Market Expansion

Targeting deeper penetration in 143 districts across 13 states, specifically focusing on less concentrated states to reduce the 29% reliance on Gujarat.

Market Share & Ranking

HomeFirst is a leading player in the affordable housing finance segment with an AUM of INR 12,713 Cr and a 3-year CAGR of 33%.

Strategic Alliances

Partnerships with IFC for green housing (INR 280 Cr) and U.S. DFC ($75 million) for women-focused mortgage loans. Co-lending partnerships now account for 3.6% of total AUM.

🌍 External Factors

Industry Trends

The affordable housing industry is growing due to government proactive measures and a shift toward digital lending. HomeFirst is positioned as a tech-driven HFC with 91% of loans approved in <48 hours.

Competitive Landscape

Competes with other affordable housing finance companies and small finance banks. Competitive advantage lies in fast processing times and a diversified lender base of 33 institutions.

Competitive Moat

Moat is built on technology-led underwriting and a 'Low ESG Risk' rating (13.6 score from Sustainalytics). The ability to maintain a 3.41% ROTA while scaling branches provides a sustainable cost advantage.

Macro Economic Sensitivity

Highly sensitive to the interest rate cycle and inflation. Management notes an easing interest rate cycle and benign inflation as tailwinds for H2 FY26 momentum.

Consumer Behavior

Shift toward digital fulfillment (80% of agreements) and in-app service requests (87%) indicates a preference for tech-enabled financial services among the low-income cohort.

Geopolitical Risks

Limited direct impact as a domestic lender, though global interest rate shifts affect ECB costs and overall market liquidity.

⚖️ Regulatory & Governance

Industry Regulations

Regulated by the National Housing Bank (NHB) and RBI. Complies with Housing Finance Company (HFC) norms, including capital adequacy and liquidity coverage ratios.

Environmental Compliance

Categorized as 'Low Risk' by Morningstar Sustainalytics with a score of 13.6. The company has an ESG Execution Team and a monthly ESG dashboard to monitor compliance.

Taxation Policy Impact

Standard corporate tax rates apply; the company reported a PAT of INR 382 Cr on a Total Operating Income of INR 1,539 Cr in FY25.

Legal Contingencies

No auditor qualifications, no restatements of financials, and no allegations of financial imprudence are reported in the clean track record.

⚠️ Risk Analysis

Key Uncertainties

Asset quality seasoning is a key monitorable, as 71% of disbursements occurred in the last four years. Potential rise in credit costs (currently 40 bps) as the portfolio matures.

Geographic Concentration Risk

High concentration in Gujarat (29% of AUM) and Maharashtra (14%), making the company vulnerable to regional economic or regulatory shifts in these two states.

Third Party Dependencies

Relies on 33 lenders for debt; 60% of funding is from banks, creating a dependency on the banking sector's credit appetite.

Technology Obsolescence Risk

Mitigated by high digital adoption; 96% of customers are app-registered, and the company uses Account Aggregator frameworks for 83% of approvals.

Credit & Counterparty Risk

Credit risk is managed through conservative underwriting; 68% of borrowers are salaried, and the average loan tenure is 16-20 years with a behavioral maturity of 6-7 years.