Shares of Home First Finance Company India saw a 7% decline, trading at ₹978 in Monday's intra-day session. This drop followed the completion of a large block deal, where nearly 19 million equity shares changed hands.
Such block deals typically indicate substantial movements in stock ownership, and in this case, it led to a notable fall in the stock price. Investors who are looking to invest in stocks often monitor such deals, as they can impact future stock performance and sentiment.
Block deal details
At 09:15 AM, a total of 18.79 million shares, amounting to 21% of Home First's total equity, were exchanged on the Bombay Stock Exchange (BSE). The identities of the buyers and sellers remain unclear.
However, reports suggest that the company's promoters may have been involved in selling their stake in the company via these block deals. The potential offloading of up to 14.7% of Home First's equity, valued at around ₹1,267 crore, has drawn considerable attention.
Impact on share price
Following the block deal, Home First's share price continued to decline, standing at ₹994.50 by 09:38 AM, a 5.5% drop from the previous close. In comparison, the BSE Sensex recorded a much smaller decline of 0.28%.
This marks a significant pullback for the stock, which has now fallen 29% from its 52-week high of ₹1,383.05 reached on October 9, 2024. For investors looking to invest in stocks, these price fluctuations may present both risks and opportunities for short-term and long-term gains.
Company overview and growth prospects
Home First Finance is a technology-driven affordable housing finance company, primarily catering to first-time homebuyers in low and middle-income groups. It provides housing loans for purchasing or constructing homes, focusing on emerging urban areas across India.
The company has expanded its presence with 142 branches across 13 states, particularly in regions like Gujarat, Maharashtra, Andhra Pradesh, Telangana, Karnataka, and Tamil Nadu. Home First is also eyeing growth in emerging affordable housing markets in states like Uttar Pradesh, Madhya Pradesh, and Rajasthan.
The company's focus on affordable housing positions it well to tap into India's growing housing demand. The government's Pradhan Mantri Awas Yojana - Urban 2.0 (PMAY-U 2.0), designed to provide housing to economically weaker sections, low-income groups, and middle-income groups, is expected to drive growth in this segment. This scheme, along with Home First's strategic focus, could boost demand for affordable housing finance.
Future outlook for Home First Finance
Despite the recent drop in its stock price, Home First Finance is well-positioned to capitalise on India's booming affordable housing market. The company's strong distribution network and expanding presence in Tier I and Tier II cities provide it with a significant growth edge. With the government's backing for affordable housing, Home First can likely expect more business opportunities in the future. For investors looking to invest in stocks related to real estate or housing, Home First could offer an interesting prospect in the medium to long term.
Asset quality and growth expectations
Home First Finance's asset quality is also expected to improve, with its focus on early-stage collections likely reducing credit costs in the coming years. The company's strategy of prioritising asset quality is expected to bear fruit over the next two financial years (FY25-FY26), driving stronger results and bolstering investor confidence.
As the company continues to expand its presence and improve its asset quality, it may become an attractive option for those looking to invest in stocks within the affordable housing sector.
Conclusion
While Home First Finance's shares saw a significant dip following large block deals, the company remains fundamentally strong, with promising growth prospects in the affordable housing sector. Investors looking to invest in stocks should keep an eye on the company's strategic moves, especially with the government's supportive policies in place. Despite recent setbacks, the long-term outlook for Home First Finance remains positive, particularly as it expands its presence in key markets across India.
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