Home First Finance IPO listing day strategy: Grey market premium soars; book gains or hold shares?

The Rs 1153.72-crore Home First Finance Company initial public offer, which saw 26.66 times subscription, is scheduled to make share market debut on Wednesday. The issue had received bids for 41.64 crore shares against 1.56 crore shares on offer. The shares were already seen commanding a strong premium over the IPO price in the grey market today. The issue was sold in the price band of Rs 517-518 apiece. Home First Finance Company shares were quoting a grey market premium of Rs 140 or 27 per cent over the issue price, to trade at Rs 658 apiece on Tuesday.

Yesterday, the shares were trading with Rs 110 grey market premium. AR Ramachandran, Co-founder & Trainer, Tips2Trade, told The Outlooker Online that given the current positive sentiment since the Union Budget 2021, Home First Finance Company should open on a strong note on listing day.

Also read: Indigo Paints shares hit 20% upper circuit after bumper debut; total listing day gains touch 110%

Ramachandran advised investors to book part profits on listing day and wait for a dip to add more in the coming weeks. Analysts at Yes Securities said that the issue is priced at post-money P/BV of 3.4x compared to its nearest competitor Aavas Financiers which trades at 6.8x on September BV. Home First Finance Company is a technology-driven affordable housing finance company, which focuses on first-time homebuyers in low and middle-income groups, offering housing loans for purchase/construction of homes. The affordable housing financier is backed by marquee private equity players like True North (34.4%), Warburg Pincus (25.6%), Aether Mauritius (22.9%) and Bessemer India (11.5%).

What should be the listing day strategy for Home First Finance?

Most of the research and brokerage firms had given ‘subscribe’ rating for the long-term to the issue. Gaurav Garg, Head Research, CapitalVia Global Research Limited, told The Outlooker Online that the listing of Home First Finance could not have been better timed with positive provisions in the Union Budget 2021 which talked of boosting affordable housing and realty sectors as such.

The share is expected to list at around Rs 650-670, investors who want to acquire it as they did not get the allotment may buy up to Rs 700. Short to long term investors can hold the stock for the foreseeable future as amidst positive economic conditions the stock is more likely to be on an upward trajectory. However, if investors feel that they are getting decent gains can exit around Rs750-820.

After the starlike debut of Indigo Paints with 75 per cent listing premium, now Home First Finance is eyeing strong listing gains. Abhay Doshi, Founder, UnlistedArena.com — dealing in Pre-IPO & Unlisted Shares — told The Outlooker Online, that bullish market sentiments will thrust the listing. Favourable policies announced in the Union Budget 2021 for the housing sector will be supportive of the business in the medium term. “In my view Home First Finance may list in the range of Rs 650-670 versus issue price of Rs 518, emanating 25-30% gains which are decent.

(The stock recommendations in this story are by the respective research and brokerage firms. The Outlooker Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)