HOMEFIRST Q1 FY26 – Growth intact, pedigree reaffirmed
They delivered another solid quarter - income up 7.1%, profits up 5.2%, and they're keeping costs under tight control with operating margins around 15%. Asset quality remains pristine at just 1.7% bad loans, and they're growing the loan book at 31% annually while maintaining a healthy 16.5% return on equity.
The business model is clearly working. They've expanded to 155 branches and are benefiting from India's affordable housing push. Even Bernstein just started coverage with an "Outperform" rating, betting on the sector's long-term potential.
But here's where it gets tricky: at 38x P/E and 5x book value, you're paying tomorrow's prices for today's performance. ICICI Securities just downgraded to "Add" with a ₹1,375 target, basically saying the stock's run too far too fast.
This is the classic high-quality growth dilemma. Home First executes beautifully, serves an underserved market, and has room to expand across India. But when valuations get this stretched, even small disappointments can hurt badly. If credit costs tick up slightly or growth slows from these high levels, the stock could face a harsh reality check.
