Dear Shareholders,
It is my privilege to share with you an update on the performance of
your Company for FY25, along with my perspective on the broader economic and sectoral
environment in which we operate. We continue to see a large, long-term opportunity in the
a ordable housing nance sector and I am pleased to highlight that your Company is
well-positioned to harness this potential.
The global economy demonstrated resilience during FY25 despite
continued geopolitical uncertainties and trade tensions. In ationary pressures eased,
offering central banks some flexibility to adjust policy rates. However, evolving global
trade dynamics will need to be closely monitored during Fy26.
India's economy, supported by prudent scal policy and domestic
demand, sustained its growth momentum. According to the National Statistical O ce's
(NSO's) second advance estimates, GDP is expected to grow at 6.5% in FY25, following
a robust 9.2% growth in FY24. While global headwinds persist, India remains poised for
steady growth, aided by government spending on infrastructure and employment schemes, tax
relief measures, easing in ation, and RBI's accommodative stance on monetary policy.
However, one cannot ignore the global trade dynamics and the uncertainty caused by its
volatility.
India's progress over the past decade has been quite remarkable.
The economy's global position has gone from the tenth largest ten years ago to the
fth largest today. As the country approaches a new era of progress and development, the
vision of building a Viksit Bharat calls for housing to play a pivotal role in fostering a
prosperous, sustainable, and inclusive future. The reason why housing is crucial is
because it is a huge employment generator and also has significant backward and forward
linkages to key sectors in the economy. The government has therefore been supportive of
growth in housing and been instrumental in providing necessary impetus especially towards
the needs of the low-income and weaker segments. During the year, PMAY-U 2.0 was launched
with an objective of providing financial assistance to 1 crore urban middle-class and
economically weaker families over next ve years.
Improving per-capita income and socio-economic trends continue to drive
housing demand in the country. Given low credit penetration, increasing digitisation and
credit availability, demand for housing nance would continue to grow over the next few
decades. This provides immense opportunities to housing nance players, like HomeFirst, to
build a sustainable business model while serving the country's social fabric toward
achieving "Housing for all".
India has made remarkable strides in digitising its economy in recent
years. It has the world's second largest mobile and internet network by number of
users. Its digital identity network is amongst the world's largest. India also tops
the world in terms of the v olume digital transactions. Utilising emerging tools of and
technologies, such as arti cial intelligence, blockchain, machine learning, and the
internet of things, has been gaining popularity. These advancements and digitisation bring
plethora of opportunities even to the financial institutions to create differentiated
segment specific agile business models to curate accurate and faster lending decisions.
HomeFirst has been a forerunner in embracing the change as we leverage technology to
harness its full potential to drive operational efficiency, deliver faster turnarounds,
gain better insights on financial and non- financial conditions of borrowers, increase
transparency, build scale, and reduce costs. Our tech stack also helps us to stay true to
our core values of being "Swift, Transparent and Unconventional".
In FY24, HomeFirst was granted a Corporate Agent
("Composite") license for soliciting life, general and health insurance by IRDAI
allowing 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. During FY25, we
partnered with various leading insurance companies and started offering insurance to our
customers which ensures protection of both - home loans and customers.
On the business side, FY25 has been another strong year in our journey
as we continue to expand our presence and penetrate deeper within our 13 states/ union
territory. During the year, we expanded our reach to 10 more districts and added 40 more
touch points (including 22 branches). Our disbursements grew 21.2% over last scal driving
a 31.1% growth in our AUM to Rs. 12,713 Crores. The growth is well-balanced with our asset
quality remaining stable, and pro tability continuing to improve further. Our GNPAs, as of
Mar'25, were at 1.7% as against 1.7% as of Mar' 24. Your Company has delivered
an ROE of 16.5% in FY25 (15.5% in FY24). Also, considering the pro table trend and capital
bu ers that we have, the Board of Directors, after due deliberation, keeping in mind the
expectation of various shareholders, has decided on a dividend of Rs. 3.7 per share (3.4
per share declared for FY24).
Your Company continues to have strong relations with lenders and has
broadened the pool of lenders from 31 relationship last year to 35 now. Your company's
strong focus on financial management during the year, was acknowledged by the rating
agencies which have rea rmed their con dence in your Company. Our long-term rating from
ICRA Ratings has been upgraded to "AA Stable" w.e.f. 28th May'25; while those
from CARE Ratings and India Ratings continue to be at "AA- Stable" and AA-
Positive" respectively; at the time of this letter going into " print. I am
delighted to mention that your Company has successfully raised fresh equity capital of Rs.
1,250 crores during Apr'25 through its maiden Qualified Institutional Placement
("QIP") offer. Your management did an excellent job of raising this capital
during an extremely volatile period in the market. The proceeds from the fund raise would
augment capital adequacy, strengthening our ability to continue the long-term growth
journey.
Your Company has an active focus on ESG responsibility and our ESG
programs are committed towards promoting environmental sustainability and community
empowerment with special attention to supporting migrant-dominated neighbourhoods towards
self-su ciency. The CSR programs are focused on setting strong foundations to sustainable
wellness and upliftment through educational programs for schoolchildren, skilling young
minds to pursue better employment opportunities, empowering women through financial
guidance and knowledge. We also provide free health checkups to the ones in need. Over
7,700 people have been benefitted by the scope of these programs, and we are dedicated to
growing our influence for a wider impact. Also, under our partnership with International
Finance Corporation ("IFC"), we have been promoting development of energy
efficient "Green" homes. These houses consume less water and energy making them
20% more energy efficient. During the year, we got 120 homes certified under this
initiative.
Your Company's commitment towards ESG responsibilities is being
well recognised and validated by independent global agencies. Our ESG score from S&P
ESG Rating increased from 34 last year to 46 underlying the sustained focus on aligning
our lending practices and operations with United Nation's Sustainable Development
Goals. Morningstar's Sustainalytics continues to assign industry leading ESG score to
HomeFirst in "low-risk" category with a score of 16.2.
HomeFirst will continue to focus on housing nance by expanding our
network of touch-points, including branches and granular sourcing channels. We have built
a scalable and pro table business model which would grow larger through a calibrated
expansion strategy, focus on the quality of the book and a diversi ed lender base.
We value the support provided by all stakeholders, Reserve Bank of
India (RBI), National Housing Bank (NHB), Securities and Exchange Board of India (SEBI),
Insurance Regulatory and Development Authority of India (IRDAI), our customers, lenders,
rating agencies, management team, investors, 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.
Deepak Satwalekar,
Chairman & Independent Director