Home First Finance set to ride Budget rally, eyes strong listing on Wednesday

MUMBAI: Home First Finance Company India is set to replicate the strong debut made by Indigo Paints today, when the shares of the company are listed on the bourses on Wednesday.

The stock was commanding a grey market premium of Rs 130 helped by the post-Budget rally in the secondary market, said dealers. The grey market premium of Home First Finance’s shares had plummeted more than 50 per cent in the past few sessions to as low as Rs 60 after quoting at Rs 150 on January 24.

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Dealers said that the rally in the secondary market after the Budget has resulted in the grey market premium of the scrip nearly doubling within two days.

At the issue price of Rs 518 per share, the grey market premium of Rs 130 will result in listing gains of 25 per cent for investors. This is still lower than what the market was pencilling in a few weeks ago.

The company’s Rs 1,154-crore initial public offering, which ran from January 21-January 25, saw a strong response from investors as the issue was subscribed 27 times than the original size. While the response from retail investors was strong, the IPO drew stronger response from high net-worth individuals and qualified institutional buyers.

The retail portion of the IPO was subscribed six times at the close of the IPO, while the allotment for HNIs and QIBs saw subscription of 53 times and 39 times, respectively.

Some brokerages had recommended subscribing to the issue of the home finance company that largely caters to first-time borrowers in the low and middle-income segment of households.

“We expect the company to post strong growth driven by strong demand for affordable housing. Given the growth prospects, we recommend a subscribe rating on the issue,” brokerage firm Angel broking had said in a pre-IPO note.

On the higher price band, the stock was valued at 4.1 times July-September price to book value, said

Securities. This brokerage said that the IPO is worth subscribing, citing strong return ratios with return on assets of 11 per cent and return on equity of 3 per cent.