A brokerage firm has identified certain players in the financial sector who are well-positioned to take advantage of current market conditions. These players have diversified portfolios, a strong focus on distribution, cater to niche customer segments, and have detailed underwriting models.
Among the top picks of the brokerage firm are Aavas Financiers and Home First Finance (HFFC). While Home First Finance has seen a 23% increase in its share price over the past year, Aavas Financiers has faced challenges with a 14% decline in its share price during the same period.
Nirmal Bang Equities has initiated coverage on Home First Finance Company with a buy recommendation and a target price of ₹1,150. They value the stock at 3.6 times FY26E P/ABV. They have also retained a buy call on Aavas Financiers with a target price of ₹1,775, valuing it at three times December FY26E P/ABV.
The brokerage firm believes that the affordable housing finance segment in India has significant growth potential due to factors like the housing shortage, low mortgage penetration, rising per capita income, and government initiatives like “Housing for All”. They expect these companies to increase their share in the overall mortgage market.
Despite recent de-rating of listed affordable housing finance companies, the brokerage firm remains positive on their long-term growth prospects. They expect earnings to grow at a CAGR of 19-28% for these companies over FY23-26E.
Overall, the brokerage firm sees deep distribution, niche customer segments, in-house underwriting, and improving productivity as key factors for success in the affordable housing finance sector. They advise investors to seek advice from certified experts before making any investment decisions.