The public offer of Home First Finance Company India was subscribed 79 percent in afternoon on January 21, the first day of bidding.
The affordable housing finance company’s public issue received bids for 1.24 crore lakh equity shares against an offer size of more than 1.56 crore shares, data available on the exchanges showed.
The issue size has been reduced to 1.56 crore shares (or Rs 880 crore) after fund-raising from the anchor book. The company raised Rs 346 crore from anchor investors on January 20.
The portion reserved for retail investors has been subscribed 87.5 percent and that of non-institutional investors 6.9 percent, while qualified institutional buyers’ portion set aside was subscribed 1.2 times.
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 is going to 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. The price band for the issue, which will close on January 25, has been fixed at Rs 517-518 per share.
“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. We expect the company to post strong growth driven by strong demand for affordable housing. Given the growth prospects, we recommend a subscribe rating on the issue,” Jyoti Roy, DVP- Equity Strategist at Angel Broking told Moneycontrol.
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Incorporated in 2010, Home First Finance Company India primarily provides housing loans to first-time homebuyers in low and middle-income groups, for commercial property, loan against property and construction finance.
Home First posted a net interest income of 58.6 percent CAGR between FY18-20 while net profits grew at a CAGR of 122.6 percent during the period. Despite the COVID-19 crisis, the asset quality has remained largely stable, with gross non-performing assets (NPA) and net NPA at 0.7 percent and 0.5 percent, respectively, at the end of September 2020.
The company had a capital adequacy ratio (CAR) of 51.7 percent during the period, which provides comfort, Roy said.
Aided by its high growth momentum on a smaller base, superior underwriting standards and efficient collections management, Home First delivered a healthy return on assets (RoA) of 2.7 percent in FY20. Return on equity of 11 percent looks modest owing to lower leverage at 4x in FY20, said Yes Securities, which also advised subscribing the issue.
News Source:- Moneycontrol