Home First Finance Company share price jumps 9%; is it an NBFC stock to buy now?

Home First Finance Company's share price saw solid gains of nearly 9 per cent in morning trade on the BSE on Tuesday, April 15, amid broad buying in the Indian stock market. Home First Finance Company's share price opened at ₹1,060.05 against its previous close of ₹1,058.80 and surged 8.6 per cent to an intraday high of ₹1,150. Around 1:20 PM, the non-banking finance company (NBFC) stock was trading 6.60 per cent higher at ₹1,128.70.

Home First Finance Company Share Price Trend

The NBFC stock has gained 27 per cent over the last year and is witnessing healthy traction this month, gaining over 12 per cent.

Home First Finance Company's share price hit a 52-week high of ₹1,383.05 on October 9 after hitting a 52-week low of ₹777 on June 4 last year.

Home First Finance Company: A stock to buy?

The housing finance company stock appears to be an attractive long-term buy. Brokerage firm ICICI Securities upgraded the stock to a 'buy' from an 'add' and raised the target price to ₹1,350 from ₹1,075 earlier.

The brokerage firm underscored that since its listing in February 2021, Home First Finance has managed to stand out among peers in the affordable housing finance space, consistently delivering 6–8 per cent quarter-on-quarter (QoQ) growth every quarter, which reflects its business’ resiliency and management’s ability to navigate external challenges arising from a rising rate cycle, regulatory changes (disbursements recognition on actual payment to customers rather than cheque issuance) and state-specific issues (e-khata issue in Karnataka).

"Home First has delivered a strong 33 per cent AUM (asset under management) CAGR between FY21–24 and 23 per cent FY25–year-to-date growth. By December 2024, RoE (return on equity) expanded to 16.6 per cent, from sub-10 per cent in March 2021, reflecting strong profitability aided by business agility and superior execution of business strategies by management," said ICICI Securities.

"Successful execution of its business strategies has led to judicious capital consumption with Home First’s financial leverage (AUM/net worth) improving to nearly five times by December 2024 (nearly three times in FY21) alongside stable asset quality. Fresh capital of ₹12.5 billion would allow adequate capital to fund incremental growth, as it plans to reach ₹400 billion in AUM by FY30," said ICICI Securities.

The stock also has valuation comfort. According to Trendlyne, an equity research platform, its trailing twelve-month PE (price to earnings) is 28.4, which is below the industry median.

On the technical front, the stock is trading above its 200-day simple moving average of ₹1,067. RSI at 57.8 is in the mid-range.

According to Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, Home First has decisively broken above the S3 Camarilla monthly pivot at ₹1,060 and is currently trading around ₹1,140.

The daily RSI has formed a double bottom and rebounded, now hovering near 66, indicating bullish momentum.

"The stock is expected to test the immediate resistance zone of ₹1,230–1,250. On the downside, strong support lies near ₹1,060. As long as the price holds above this key level, a buy-on-dips strategy is advisable, with potential for further upside in the short to medium term," said Patel.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.