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Target: ₹400
CMP: ₹343.45
Aptus Value Housing (APTUS) is a niche, affordable-housing finance player with expertise in the self-employed/LIG segment (72/73 per cent of AUM) and strong presence in the South.
APTUS focusses on Tier III/IV locations (rural contributes about 66 per cent of AUM) and around 40 per cent of its customers are New To Credit, which helps it to have better risk pricing (yields of about 17 per cent).
APTUS has industry-leading profitability (ROA of nearly 7.5 per cent in FY22ii) with superior margins (12 per cent+) and a frugal operating-expenses structure (about 20 per cent CIR). Its 100 per cent, in-house ‘from-origination-to-collection-to-recovery’ model helps it enjoy best-in-class asset quality.
We expect APTUS to report about 28 per cent/23 per cent AUM/PAT CAGT over FY22-25. With a multi-year growth opportunity, solid business foundation and strong capitalisation, we expect APTUS’ superior performance to continue in ensuing years.
Strong presence in the underserviced and expanding affordable housing finance segment, the difficult to assess self-employed segment, impeccable asset quality, superior profitability and strong capitalisation would ensure that premium valuation sustains going forward. Presence in the deep rural segment should help mitigate competition in the near-to-medium term. Valuation premium will be contingent upon higher asset quality and continued strong performance on account of asset quality.
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