Aim to double AUM to Rs 20,000 crore by FY27, says HomeFirst MD & CEO

Viswanathan discusses the demand in the housing segment and expansion plans

Home First Finance Company India (HomeFirst), a housing finance company, plans to provide loans in every pincode of the southern states within two to three years. MANOJ VISWANATHAN, managing director and chief executive officer, HomeFirst, discusses demand in the housing segment and expansion plans in a video interview with Aathira Varier. Edited excerpts:

The assets under management (AUM) of the company grew by 33.5 per cent year-on-year (Y-o-Y) in the third quarter of 2023-24 (FY24). How do you see demand going ahead?

AUM grew by 33.5 per cent Y-o-Y to nearly Rs 9,000 crore. Our aim, strategy, and execution on the ground have been targeted towards 30 per cent AUM (annualised) growth, and that is what we aim to deliver this financial year (FY24) also.

Last financial year (2022-23), we ended with an AUM of about Rs 7,200 crore. So we aim to deliver 30 per cent on that, and we will end up with Rs 9,500-9,600 crore at the end of this year.

Next financial year (2024-25), we are also looking at similar growth, 30 per cent on the ending figure. So overall, we aim to double our AUM from here on out. As we will end the year at nearly Rs 10,000 crore, we are looking at reaching the Rs 20,000 crore target by 2026-27.

The spread declined during the October-December quarter. Do you see further compression?

We are operating at about 13.5 per cent in the market in terms of yields. We are looking to maintain the yields but spread compressed because the cost of borrowing went up, and we have been guiding to this for the past few quarters.

The cost of borrowing is going to keep on inching up as rates keep getting reset by the banks. We had a 20-basis points (bp) increase in rates this quarter (October-December) also. As a result of this, the spread also compressed by about 20 bps.

How does the company plan to expand its presence?

Expansion of presence can happen through either branch expansion or touchpoint expansion. Branches will come later.

We are continuously expanding. We are at about 300 touchpoints and are looking to expand that to about 500 in the next three years. Commensurately, the branches will also increase. Currently, we have 123 branches, and every year we are looking at 20-25 branches. The branches service the touchpoints, so several touchpoints will together be serviced by one branch.

In the southern part of the country, our presence is quite strong. We have a deep presence in Tamil Nadu and a fairly strong presence in Andhra Pradesh and Telangana as well. So we will continue to deepen that.

We aim to be able to offer a loan in every single pincode of these states in the next two to three years.

Have you seen any impact on demand due to elevated interest rates?

Demand has always been very strong. I think today housing is a major aspiration among people. Since incomes are going up and people have reached a point where there is at least a very large population in the country that is in a position to own a home because they can afford to pay the instalments for a small housing loan. As a result, there is a lot of demand, and we anticipate demand to keep growing. Also, a moderation in inflation and interest rates will further push up demand.