A company is said to be ‘fundamentally strong’ when it portrays two basic characteristics, the first being a favourable debt-to-equity ratio and the second being strong financial numbers giving an edge to the company at times of financial distress faced by peers in the industry.
Herein this article, we will analyze one such fundamentally strong stock with an upside of 27 percent:
Home First Finance Company India Limited
The shares of Home First Finance Company India Limited closed today at Rs 785, gaining around 2.20 percent as compared to the previous closing levels of Rs 768.35. In the last one month, the scrip has surged over 12 percent ranging from Rs 697 at the end of May to the current price levels. The company has a market capitalization of Rs 6,900 crores.
Having a glance at the standalone financials of the company, the basic metrics indicating a smooth flow of activities such as the operating revenues as well as net profits saw an increase with the former moving from Rs 595 crores during FY21-22 to Rs 790 crores in FY22-23 and the latter, during the same time horizon, moving from Rs 186 crores to Rs 228 crores.
In addition to the above, the profitability ratios were on the rise with the return on equity (ROE) moving from 11.82 percent during FY21-22 to 12.56 percent in FY22-23 and the return on capital employed (ROCE), keeping the timeframe the same, stayed at the same levels which are of around 27 percent.
ICICI Securities gave a ‘Buy’ recommendation on the stock with a target price of Rs 995 indicating an upside of 27 percent as compared to the current prices prevailing in the markets.
The rationale behind providing such a recommendation is pertaining to some key differentiators which include the end-to-end digital loan process, centralised underwriting (data science-backed), etc.
According to the shareholding pattern data available for the March 2023 quarter, the Promoters hold a 33.46 percent stake, and Foreign Institutional Investors (FIIs) hold a 15.69 percent stake in the company.
Home First Finance Company India Limited is an affordable housing finance company that is primarily engaged in the business of lending housing loans, loans to purchase commercial property, loans against property, and construction finance.
Written by Amit Madnani
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