The Home First Finance Company (HFFC) IPO opens for subscription on January 21, 2021, expected to raise Rs 1,153 crores from the market. It is the third offer to hit the market after IRFC and Indigo Paints. The company’s previous attempt to launch IPO got delayed due to COVID-19.
The issuer has launched the shares in the price band of Rs 517-518, respectively at 258.50 and 259 times of the face value. Per the red herring prospectus (DRHP) filed with SEBI, the company plans to utilise the proceeds in the next FY to bolster its capital equity base to meet capital requirements arising from future expansion plans.
Let’s look at the key points and important dates regarding the initial public offering to make an informed decision.
- The offers size of 2.22 crore shares carrying a face value of Rs 2 is expected to fetch Rs 1,153.71 crores at the upper price band. It includes fresh issuance of 51.15 lakh shares worth Rs 265 crores and offers for sale of equities amounting to Rs 888.72 crores
- The issuer also raised Rs 79 crores through a pre-IPO allotment route, which reduced the initial offer size of Rs 344.08 crores to Rs 265 crores
- The bidding for anchor investors opened a day before where HFFC raised Rs 346 crores
- The issuer has reserved fifty percent of the issue size for qualified institutional buyers and 35 percent for non-institutional buyers. The remaining is available for individual retail investors
- The minimum bid size for retail investors is 28 equities, but investors can increase their bid size up to 13 lots or 364 shares
- The shares will debut in both BSE and NSE stock exchanges on February 3, 2021
Home First Finance Company IPO: Should You Buy?
As the offer opens for subscription, let’s look at company financials for clarity.
Home First Finance Company offers home loans to first-time homebuyers in the low and middle-income group segment with an average loan size of Rs 10.1 lakh. The company has deep penetration in the larget housing finance market with a strong network of different players for a diverse sourcing channel. Between FY 2018 and FY 2020, its gross loan asset grew at a CAGR of 63.4 percent.
The home finance segment also has other big players. However, the unique technology-backed business model and niche market ensure that HFFC faces low competition from the large lenders. It caters to the low-income homebuyers in the urbanised areas of 11 states. As on September, HFFC has serviced 44, 796 active loan accounts, of which 73.1 percent of its customers are salaried, and 25 percent are self-employed. Its stage-3 loan asset expressed as a percentage of gross loan asset stood at 0.74 percent in September, lowered from 0.87 percent from March 2020.
Home First Finance Company IPO subscription window for five days will remain open from January 21-25, 2021.
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