Housing Finance Stock Jumps 7% on Strong Q3 Results; Morgan Stanley Sees 48% Upside

Synopsis: Home First Finance shares rose 7% to Rs. 1,110.65 after Q3 results showed 19% YoY sales growth, 44% net profit surge, 33% AUM CAGR, and a reduced cost-to-income ratio, with Morgan Stanley seeing 48% upside.

This is a leading affordable housing finance company focused on providing home loans to low- and middle-income customers across India is now in the spotlight after delivering robust Q3 results with net profit growth of 44%, and Morgan Stanley sees 48% upside from the current levels.

With a market capitalisation of Rs. 11,542 cr, the shares of Home First Finance Company India Ltd are currently trading at Rs. 1,110.65 per share, increasing 7% in today’s market session, making a high of Rs. 1,124.60, up from its previous close of Rs. 1,049.75 per share. 

Q3 Results 

YoY performance

Home First Finance reported strong year-on-year growth for the quarter ended December 2025. Sales rose by 19% from Rs. 406 cr to Rs. 482 cr, while EBITDA increased by 17% from Rs. 325 cr to Rs. 380 cr. Net profit surged 44% from Rs. 97.4 cr to Rs. 140 cr, and EPS grew 24.2% from Rs. 10.86 to Rs. 13.49, reflecting robust operational performance and profitability expansion. 

AUM increased from Rs. 11,949 cr to Rs. 14,925 cr. AUM CAGR increased by 33% over the last three years. Disbursements also rose by 10% from Rs. 1,193 cr to Rs. 1,318 cr. Cost-to-Income ratio reduced by 310 bps from 35.2% to 32.1%. 

QoQ performance

On a quarter-on-quarter basis, the company’s sales increased marginally by 1% from Rs. 477 cr to Rs. 482 cr, while EBITDA was largely stable, rising 0.26% from Rs. 379 cr to Rs. 380 cr. Net profit improved by 6% from Rs. 132 cr to Rs. 140 cr, and EPS rose 6% from Rs. 12.73 to Rs. 13.49, indicating steady growth momentum in the latest quarter.

Morgan Stanley commentary

Morgan Stanley maintains an “Overweight” rating on Home First Finance Company, setting a target price of Rs. 1,640, implying 48% upside from current levels. The company’s profit after tax (PAT) exceeded estimates, which was primarily driven by better margins and controlled costs. This suggests that Home First has been efficient in managing its expenses and operational performance, leading to stronger-than-expected profitability.

Home First’s asset quality remains broadly stable, with improvements noted in early delinquency trends. Margins have shown a positive surprise, while any weakness in other income, particularly from lower fair value gains, is considered non-structural. 

The company’s growth momentum is healthy and aligns with analysts’ expectations. Operational expenses (Opex) are well controlled, and the adjusted operating profit grew 43% year-on-year, despite facing a one-time cost related to changes in labor laws. This demonstrates strong operational efficiency and resilience in profitability. Additionally, balance transfer outflows eased quarter-on-quarter (QoQ), suggesting a reduction in competitive pressure.

About the company 

Home First Finance Company Ltd makes owning a home fast, easy, and stress-free, with approvals in just 48 hours and minimal paperwork. Backed by a dedicated team of 1,600+ professionals, it has served over 1,17,000 families nationwide, combining technology and personal guidance to turn homeownership dreams into reality.

It demonstrates strong financial performance, with a ROCE of 11.4% and ROE of 16.5%, reflecting efficient capital utilization and healthy returns for shareholders. Its PEG ratio of 0.86 suggests the stock may be reasonably valued relative to its growth potential.

The company has delivered impressive profit growth of 36.9% CAGR over the last five years and a median sales growth of 45.4% over the past decade, highlighting consistent expansion. 

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