HomeFirst Finance PAT zooms 188.7% in Q3 FY22

28 Jan 2022 , 09:15 AM

HomeFirst is a technology driven affordable housing finance company that targets first time buyers in low and middle – income groups. The company was listed in Feb’21 on Bombay Stock Exchange & National Stock Exchange of India.

Particulars	Q3FY22	Q3FY21	y-o-y	Q2FY22	q-o-q
AUM (INR Crs)	4994	3941	+26.7%	4617	+8.2%
Disbursement (INR Crs)	570	349	+63.3%	515	+10.6%
Total Income (INR Crs)	152	110	+37.6%	146	+3.8%
PAT (INR Crs)	46	16	+188.7%	45	+6.6%(2)
Spread (%)(3)	5.6%	5.0%	+60 bps	5.6%	0 bps
ROA (%)	4.0%	1.7%	+230 bps	3.9%	+30 bps(2)
Gross Stage 3 (%)	2.6%(1)	1.6%(1)	NA	1.7% (1)	NA
Cost to Income (%)	33.0%	50.0%	-1700 bps	35.2%	-220 bps

Commenting on the performance Mr. Manoj Viswanathan, MD & CEO said,

“HomeFirst has crossed INR 5,000 Crores AUM in the month of January’2022. This is a significant milestone in the journey of HomeFirst. In its eleven-year journey, the company has provided housing loans to more than 60,000 customers across 13 States/UT in the country. We are grateful to our employees, customers, business partners, regulators and shareholders for placing their faith in us and encouraging us through our 12-year journey. Our objective has always been to simplify the home loan process for first-time homebuyers and provide them excellent service through state-of-the-art technology adoption.

Our Q3 FY22 performance was in-line with our internal expectations, with highest ever disbursals again at INR 570 Crs. We recorded an AUM growth of 26.7% y-o-y and a sequential growth in PAT of 6.6%. Q3 FY22 did not witness any major disruption from Covid and hence was a normal quarter for HomeFirst. We are also working to bring our asset quality to pre-covid levels. Significant improvements in 1+ DPD and 30+ DPD number for Q3 compared to Q2 indicates that it is progressing in the right direction. We are pleased to share that ICRA has revised the outlook on HomeFirst’s long term credit rating from A+ “Stable’ to A+ ‘Positive’.

Bounce rates improved in Jan’22 to 15.2% (Q3 FY22 — 15.7%, Q2 FY22 — 16.5%). 1+ DPD improved from 7.6% to 6.5% on q-o-q basis. 30+ DPD improved from 5.2% to 4.7% on q-o-q basis. Our Gross Stage 3 (GNPA) stands at 2.6% in line with RBI circular dated 12 Nov 2021. Prior to such classification, it stands at 1.7% (Sep’21: 1.7%).

Digital adoption has further improved. Usage of the customer app for various activities has increased. 76% of our customers are registered on our app as on Dec’21 compared to 72% in Sept’21. Payments received via the app have gone up by 114% y-o-y. Over the years, we have made our systems more robust and constantly added meaningful features to enhance the customer experience – the latest being the addition of biometric login in our mobile app which greatly enhances the security for our customers.

We continue to strengthen our Board of Directors. After receiving shareholders approval for appointment of Ms. Geeta Dutta Goel and Mr. Anuj Srivastava as Additional Directors, the Board of Directors based on the recommendation of the Nomination and Remuneration Committee (subject to shareholders approval), has approved the proposal for the appointment of Ms. Sucharita Mukherjee as Additional Director on the Board of the Company to function as Non-Executive Independent Director; w.e.f. 1st Feb’22. Ms. Mukherjee’s vast experience in financial inclusion and developing mass market financial solutions will further benefit HomeFirst and strengthen the Board.

We entered into a strategic co-lending partnership with Union Bank of India (UBI) to offer home loans to customers at competitive interest rates. The partnership aims at leveraging the strengths of both entities to provide a seamless experience to retail home loan customers.

We believe that the opportunity in the affordable housing space is very large and will span across multiple decades. Affordable Housing Finance sector remains one of the most resilient segments, validated through better collection efficiencies and asset quality compared to other segments. Besides, the inherent resilience of this sector, our focus on the salaried segment in industrialized and urbanized states helped us stay on course through these difficult times.

We aim to be a key player in this segment by continuously expanding our physical and digital presence. We are dedicated to our mission to be the fastest provider of home loans to aspiring middle-class customers. We remain committed to our strong tech-led operating model and continue to invest in building a trusted brand that delivers superior service to customers with industry leading turnaround times.”
Key Highlights for Q3 FY22:

Asset under Management (AUM):
ï‚Ÿ INR 4,994 Crs, growth of 26.7% over Q3 FY21.
ï‚Ÿ Sharp focus on housing loans that contribute 91% of AUM and EWS / LIG category that forms ~75% of the customer base.

Distribution:
ï‚Ÿ As on Dec’21, the Company has 76 branches with presence in 12 States and 1 Union Territory.
ï‚Ÿ 4 new physical branches added and business commenced in 7 new potential branch locations. In addition, 15 new digital branches have been launched taking the total number of touchpoints to 187.

Disbursements:
ï‚Ÿ Disbursements of INR 570 Crs in Q3 FY22, y-o-y growth of 63.3%.

Asset Quality:
ï‚Ÿ Bounce rates have improved to 15.2% in Jan’22 from 15.7% in Q3 FY22 from 16.5% in Q2 FY22.
ï‚Ÿ 1+ DPD improved from 7.6% to 6.5% on q-o-q basis.
ï‚Ÿ 30+ DPD improved from 5.2% to 4.7% on q-o-q basis.
ï‚Ÿ Gross Stage 3 (GNPA) stands at 2.6% in line with RBI circular dated 12 Nov 2021. Prior to such
classification, it stands at 1.7% (Sep’21: 1.7%).

Provisions:
ï‚Ÿ ECL provision as on Dec’21 is INR 47.3 Crs; resulting in total provision to loans outstanding ratio at 1.2%; and the Stage 3 provision coverage ratio is at 46.2%.

Borrowings:
ï‚Ÿ Total borrowings including debt securities are at INR 3,024 Crs as on Dec’21 up from INR 2,839 Crs as on Dec’20. The company continues to carry a liquidity of INR 1,405 Crs as on Dec’21.
ï‚Ÿ Cost of borrowings remains low at 7.2% in Q3 FY22. It is lower by 80 bps compared to Q3 FY21 which stood at 8.0%.
ï‚Ÿ LCR as of Dec’21 stood at 389%.

Spread:
ï‚Ÿ Spread on loans stood at 5.6% in Q3 FY22, flat compared to Q2 FY22 and 60bps higher on y-o-y basis.

Capital Adequacy:
ï‚Ÿ Total CRAR at 59.0%. Tier I capital stands at 57.8% as on Dec’21.
ï‚Ÿ Networth as on Dec’21 is at INR 1510 Crs vis-à-vis INR. 1092 Crs as on Dec’20.

Financial Performance:
ï‚Ÿ Q3 FY22 Total Income at INR 152 Crs; y-o-y growth of 38% from INR 110 Crs in Q3 FY21, sequential increase of 3.8% over Q2 FY22 of INR 146 Crs.
ï‚Ÿ PPOP stands at Rs 65 Crs, growth of 9.2% on q-o-q basis and 127.7% on y-o-y basis.
ï‚Ÿ Q3 FY22 PAT at INR 46 Crs, sequentially up by 6.6%# from INR 45 Crs in Q2 FY22.
ï‚Ÿ ROA at 4.0% improved by 230bps on y-o-y basis and 30bps# on q-o-q basis.