IPO

Home First Finance Company’s IPO : HFFC’s Dates and Other Details

Home First Finance Company is a housing finance company. It started in the year 2010. It’s primary aim is to let every income class get their own home by providing the home loans to everyone. It deals with the home loan requirement ranging from 10 lakhs Rupees to 50 Lakh Rupees. It provides loans to all those people who don’t have full access to banking loans. Till today the company has approved more than 55000 housing loans and has 65 fully functioning branches across India. It has a loan asset base of more than 3000 crore Rs. The company’s biggest competitor is Aavas Financiers Ltd.

The main advantages that the company provides to its customers are :

Whatever finance profile the customers has, the company has a loan segment available for them
The loan approval process is speedy and quick. The time limit that the company promises for loan approval is 48 hours.
The company requires minimum documentation. Even if the person has no income proof or deals in cash salary, the company provides a loan.

Hence the company majorly focuses on the middle and lower income group for its business. It also offers loans against collateral (i.e. property). It also functions in the commercial property buying segment. The company is highly active in Maharashtra, Gujarat, Tamil Nadu and Karnataka. The company has a technology driven business model which makes its loan providing process quick.

IPO Details

The IPO for HFFC (House First Finance Company IPO) begins from 21st January. The Subscription period ends on 25th January. The IPO size is 1500 Crore Rs. The company has 400 Crore Rs. for fresh issue and the remaining 1100 Crore Rs. is allocated for Offer For Sale. The Grey market premium is aimed around 100 Rs. The price is set at Rs. 507 – Rs. 510 per share. The IPO registrar is KFintech Pvt. Ltd. The peer review auditor and statutory auditor for the company is Walker Chandiok & Co. LLP. The IPO issue type is book built issue and the Face value is set at 2 Rs. per share. The lot size amounts to 29 – 30 shares per person. Also out of the entire issue the retail allocation is 35%.

Tabular Data

IPO OPENING DATE	21st January
IPO CLOSING DATE	25th January
ISSUE TYPE	Book Built Issue
Face Value per share	Rs 2 per share
IPO price band	Rs. 507 – Rs. 510
LOT SIZE	29 – 30 shares
MINIMUM ORDER QUANTITY	29 – 30 shares
ISSUE SIZE	1500 Crore Rs.
OFFER FOR SALE	1100 Crore Rs.
FRESH ISSUE	400 Crore Rs.
LISTING AT	NSE, BSE
LISTING DATE	3rd February

Important Dates

IPO OPENING DATE	21st January
IPO CLOSING DATE	25th January
IPO ALLOTMENT DATE	29th January
REFUNDS	1st February
DEMAT A/C CREDITED ON	2nd February
IPO LISTING DATE	3rd February

The IPO opens on 21st January and closes on 25th January. The allotment is planned on 1st February. The refunds for those who did not get the shares is 29th February. The refunds are initiated on 1st February. The DEMAT accounts of all those who got the allotment will be credited with shares on 2nd February. The IPO listing Date is set on 3rd February.

Promoter Holding

The company has two promoters. The first promoter is True North Fund V LLP. This company has more holding than the other one. Another promoter is Aether (Mauritius) Ltd. The promoter holding pre IPO listing is 94.10%.

Warburg Pincus took up 25% stake in the company Pre-IPO launch. Recently the company increased its holding to 30.62%.

The lead managers for the firm are :

Kotak Mahindra Capital Company Ltd.
Axis Capital Ltd.
Credit Suisse Securities Pvt. Ltd. (India)
ICICI Securities Ltd.

Objectives for IPO

The company has mentioned its objectives before the launch. But the objectives are not well specified and clear. They are :

For meeting the future capital requirements.
The company wants to expand its equity capital base.
For fulfilling general corporate purposes.

Company Financials

PARTICULARS (in million Rs.)	2019-20	2018-19	2017-18
ASSETS	34797	24821	13648
REVENUE	4197	2710	1343
NET PROFIT	790	450	160

Out of the entire asset base the housing loans account for nearly 92%. Also the asset base has increased to almost 60% in 2017 – 2019 time period. The company has revenue of 4197 million Rs. in the 2019-20 time frame. It approximately increased 3 times in the past three year time frame. The N.P. (profit) of the company looks progressive in a good manner. The net profit was 160 million Rs. in 2017-18 and it increased to 790 million Rs. in 2019-20 which is approximately 5 times in 3 years. The company is doing really well in the last three years and the figures suggest a positive growth is possible further on.

Company Strategies and Future Prospects

The company focuses on utilizing its technology model into expanding its loan base with ease of loan availability.
It also aims to expand its customer reach by increasing the number of outlets and branches in the long run.
The company aims to diversify its sources of availing finance so that it can get benefits of lower interest rates and more cash flow.
Company is working on creating a good risk management portfolio.
It is also aiming in entering the large and affordable housing market

Pros

The company has a good technological model for quick and speedy loan approval.
It solves the problems of lower and middle income groups with less documentation.
The company allows loan availment without any solid income proof as well.
It has an auto-prepay feature which allows its customer with timely payment of EMI without any charges for the same.
The loan approval time is 48hrs only.
The company has a highly diversified lead channel.
It has a well experienced managerial team.
Due to its low income group focus it gets a strong and easy penetration into the largest housing finance market.
It has an aim to enter the larger market as well.
It is trying to diversify its fund borrowing portfolio

Cons

The objectives for utilization of IPO money are vague and not specifically explained.
The company focuses on lower income segments and it allows the people to have loans without any solid income proof. This triggers two problems. One is the risk of conversion of these loans into Non – performing assets (NPA’s). Another problem is the lower income is sometimes not able to pay regular interest due to income instability. Hence this causes the company’s revenue to shrink in the long run and eventually may get converted into a high loss.
The company’s risk profile is not well managed right now due to less time period in its business segment.
The company has a lack of diversity in borrowing its funds.