Interview with Home First Finance Company India Ltd

Nutan Gaba Patwari, CFO, Home First Finance Company India Ltd says their approach to growth is organic in a large and growing market and is built based on bottom-up demand.

How is Home First Finance uniquely positioned to capitalize on the tailwinds giving a flip to India’s affordable housing sector?

We believe Home First has the right mix to benefit from the decadal opportunity in affordable housing finance. Our organisation structure is lean, and efficient in design which makes it highly scalable. With extensive use of technology in every process, starting from sourcing from connectors to centralised underwriting to processing of transactions, the potential to scale the business is very high.

Can you shed some light on your current borrowing mix, state of liquidity and Asset Liability Management (ALM)?

Home First’s borrowing mix is very well diversified. As of March 2022, we have a healthy mix with 45% is from banks (public sector 22% and private sector 23%), 27% from NHB Refinance and 23% from direct assignment. We have zero borrowings through commercial papers. Also, our cost of borrowing is competitive at the current rating scale. ALM (Asset Liability Management) is the key driver for our borrowing decisions and we continue to have a robust positive surplus on a cumulative basis across all tenures of our book.

Home First Finance’s Net Interest Margin (NIM) has improved significantly over the last six quarters. What factors are responsible for this improvement and progress from here on?

Home First’s NIMs have improved in the recent past mainly due to sustained spreads and further optimization of cash on the balance sheet. We believe NIMs are expected to be stable going forward.

What are the emerging trends of digital adoption you are witnessing among consumers in the post-pandemic world?

Customers have adapted to technology during covid and that is a good outcome for Home First. This helps us in improving productivity by reducing load at every step of the workflow. Payments and service requests made via the app in FY22 have gone up by 42% on a YoY basis. Our e-onboarding initiatives have been received well with e-stamp adoption in 41% of the loans in FY22, e-NACH in 38% of the loans in FY22 and e-sign in 16% of the loans in FY22. Also, we have integrated third party databases which helps us to deliver 48-hour turn-around time (TAT) to 92% of the customers for the loan approval in Q4FY22.

What are some of the biggest challenges you are currently facing?

Our processes are extremely robust and built with high degrees of control. Our approach to growth is organic in a large and growing market and this growth is built based on bottom-up demand as such we do not foresee any business model challenges. For the short term, talent management has been a key challenge for everyone and Home First is also working within the same ecosystem. We provide a vibrant culture, equal pay/compensation, opportunities to grow with a clear career path, zero bureaucracy, ESOPs, etc. We are also classified as a ‘Great Place to Work’ for 2nd year in a row. We believe that this is transitory.