Whalesbook
Motilal Oswal's bullish stance follows Home First Finance's strong performance in the third quarter of fiscal year 2026, where net profit surged 44% year-on-year to INR1.4 billion. Excluding one-time provisions for new labor codes, the profit growth accelerated to 47% year-on-year. Net Interest Income (NII) also demonstrated robust expansion, growing 44% year-on-year to INR2.3 billion, exceeding the brokerage's estimate by 5%.
Robust Operational Performance
The company's Net Interest Margins (NIMs) are projected to remain healthy, with estimates for FY26 and FY27 at 6.2% and 6.1% respectively. Operating expenses grew at a more moderate pace of 23% year-on-year, contributing to a significant rise in Pre-Provision Operating Profit (PPoP), which jumped approximately 41% year-on-year to INR2 billion. Credit costs remained within expectations at INR142 million, translating to an annualized credit cost of around 46 basis points.
Positive Growth Outlook
Looking ahead, Motilal Oswal forecasts Home First Finance to achieve an Assets Under Management (AUM) Compound Annual Growth Rate (CAGR) of roughly 24% between FY25 and FY28. This growth is premised on the company's strategic focus and market position. The 'Buy' rating and a target price of INR1,370 are based on a multiple of 2.6 times the projected Book Value Per Share (BVPS) for December 2027, indicating confidence in sustained value creation.