"Improvement in social infrastructure and employment opportunities have given an
impetus to demand in towns beyond the Top 8 markets”
Deepak Satwalekar
Chairman / Independent / Non-Executive Director
Dear Shareholders,
I feel happy to write this letter again highlighting your Company's performance for the
year FY24 and sharing our strategy for achieving future growth.
India's economy has been the most resilient economy globally. I am saying this because
India has delivered growth in every year despite all the disruptions, internal and
external, that India has witnessed in the past like demonetisation, IL&FS crisis, GST
implementation, war in Europe, turmoil in the Middle East, etc. with the only exception of
FY21 which was a Covid impacted year.
Potential of the Indian economy is high given the domestic consumption pattern, the
structure of the economy and with exports expected to grow with China +1 theme. The
economy can grow at higher growth rates vis-a-vis global peers as highlighted by the
International Monetary Fund (IMF) outlook. In CY23, India's GDP delivered strong growth of
7.8% vs global growth of 3.2% (as per IMF) despite the ongoing Russia-Ukraine &
Israel-Gaza conflicts and Red Sea Crisis which impacted the global logistics industry and
Indian exports to an extent. If we hadn't faced these issues, global economic growth would
have been better & India's GDP growth possibly would have potentially been higher.
Government's prudent fiscal policies controlled the de cit while proceeding with
significant infrastructure creation. The government is focusing on laying a strong
foundation for sustainable high growth in the long-term for the Indian economy. Production
Linked Incentive (PLI) schemes are considered a positive step by the industry and there is
a strong belief in Private sector capex returning with a big bang in the near future as
capacity utilization improves. Government driven capex on Infrastructure has provided an
impetus to growth while creating an enabling environment for future economic growth.
India has taken major steps in using technology to enable deepening of financial reach
through digital medium. HomeFirst has always focused on using Technology to drive
transparency & scalability. IndiaStack (India's “Digital Public Infrastructure /
DPI”) has supported our journey, bringing more efficiency in the processes right from
sourcing customers, collecting / verifying KYC documents to collections. HomeFirst has
leveraged technology to drive operational efficiency, deliver faster turnarounds as an
important differentiator and reduce costs. DPI has further helped your company to drive
productivity. We have always welcomed new products like account aggregators, etc. Your
company is admired by stakeholders including regulators, lenders, employees and vendors in
building a sustainable and scalable business model. We are focused on maintaining the lead
on technology usage in business and service customers & other stakeholders in the best
possible way. Our tech stack also helps us to stay true to our core values of being
“Swift, Transparent and Unconventional”.
Housing sales in India have remained resilient despite 250 bps rise in repo rates by
Reserve Bank of India (RBI) in the past 2 years. HomeFirst continues to focus on the
Housing Finance business as the opportunity is large and presents a multi-decadal
opportunity in this segment itself. With such a large population to address and requiring
special knowledge of underwriting informal customers, low mortgage to GDP penetration vs
peer countries, multiple upstream and downstream benefits of housing construction, I have
no doubt in my mind that housing finance players have a large market to cater to and
HomeFirst with industry leading processes and practices will continue to show pro table
growth.
Improvement in social infrastructure and employment opportunities have given an impetus
to demand in towns beyond the Top 8 markets giving rise to markets such Lucknow, Nagpur,
Indore, Jaipur, Rajkot, etc. which has now become our engines for growth. Consequently,
our distribution reach is widening. During FY24, your Company added 56 touchpoints to
reach a total of 321 touchpoints. 22 physical branches were added to reach a total of 133
branches. HomeFirst is planning to add another 20-25 physical branches annually to reach
about 200 branches and about 60-70 touch points to reach 500 touchpoints by March 2027.
On the business front, FY24 has been a fulfilling year with AUM growth of 34.7% over
previous year. HomeFirst disbursals at 3,963 Crs and helped AUM to cross 9,698 Crs.
This growth in business scale is delivered without compromising on asset quality with
GNPAs under control at 1.7% (pre-RBI circular GNPA is 1.1%). We focus early on delays in
payments to reduce owthrough to later buckets.
During the year, credit rating agency “India Ratings & Research” (100%
owned by Fitch Group) revised Outlook from “AA- Stable” to “AA-
Positive”. This signifies HomeFirst's strong financial pro le along with its ability
to maintain adequate liquidity and exhibit efficient capital management. We continue to
diversify our funding sources. Your Company continues to have strong relations with
leading commercial banks in the country enabling it to raise funding through term loans,
non-convertible debentures, direct assignment of loans to banks thus maintaining healthy
liquidity in these uncertain times. Re finance from NHB continues as an important source
of funding for affordable housing including HomeFirst.
Your Company has delivered an ROE of 15.5% in FY24. We will continue to improve on this
number in the coming year. Also, considering the pro table trend and capital buffers that
we have, the Board of Directors, after due deliberation, keeping in mind the expectation
of various shareholders, has decided on a dividend of 3.4 per share (from 2.6 per share
declared for FY23).
Dedicated to fostering community empowerment and environmental sustainability, our ESG
initiatives prioritize uplifting select neighborhoods with migrant populations toward
self-sufficiency. The CSR programs are aimed at skilling and employment for youths and
young adults, educational programs for school children, and timely medical assistance in
the form of free check-ups for the region's all-round development. The scope of these
initiatives has accommodated 2,000+ migrant households and we are committed to expanding
our influence for a broader impact.
In line with India's mission to go carbon neutral by 2070, your company partnered with
the IFC to develop a green portfolio of Affordable Individual Homes. These homes are 20%
more energy efficient with lower energy consumption, and water usage. As we look to the
future, our pledge remains unwavering - we will continue to improve our lending practices
with a responsibility towards the environment, ensuring a sustainable legacy for
generations to come.
Your Company received additional validation on ESG initiatives from S&P ESG Rating
with a score of 34. This adds our visibility to stakeholders on ESG related initiatives.
Morningstar's Sustainalytics continues to assign industry leading ESG score to HomeFirst
in low-risk category.
During the year, HomeFirst has also been granted a Corporate Agent
(“Composite”) license for soliciting life, general and health insurance by
IRDAI. This will allow us to offer insurance to our customers and ensure that the home
loans are protected by the insurer in case of any eventuality at the customer's end.
HomeFirst has a pro table business model which will grow larger through a calibrated
expansion strategy, focus on customer requirements, quality of the book and a diversified
lender base. We value the support provided by all stakeholders, National Housing Bank
(NHB), Reserve Bank of India (RBI), our customers, lenders, rating agencies, management
team and my colleagues on the Board. The unwavering efforts of our employees who are our
brand ambassadors on ground is deeply appreciated as we could not have achieved this
industry leading performance without them.
Thank You,
Deepak Satwalekar,
Chairman & Independent Director