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Target: ₹550
CMP: ₹445.90
Aadhar Housing Finance (Aadhar) has carved a niche for itself in affordable housing finance, pioneering the space as a category creator, armed with its distinct business-scaling strategy.
As the industry chose safer shores of credit-tested markets in South and West India, Aadhar established its inaugural branch in Uttar Pradesh – uncharted territory for affordable housing finance; and what stands out is its focus on diversification. As of March 2024, Maharashtra accounted for only 14 per cent of its AUM vs peers’ single-State contribution of >30 per cent. Aadhar’s execution credentials also set it apart; among AHFCs, Aadhar’s ₹21,100-crore AUM (March 2024), is pre-eminent and FY24 RoE, at 18.4 per cent, is notable.
We believe pan-India distribution with one of the most extensive branch network of over 500 branches would help it sustain above 20 per cent AUM growth in the near term, increased proportion of informal self-employed segment in overall mortgage portfolio is likely to result in better spreads than peers, levers for cost of fund reduction, above 70 per cent floating rate asset and liability to insulate spread from interest rate cycles, and steady credit cost at around 20 bps over FY24-26E would help it in sustaining better RoE than peers.
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