Aptus Value Housing Finance is consistently delivering a strong profitability (about 35 per cent CAGR in previous 4 years), and healthy ROA (above 7 per cent) driven by strong loan growth (about 30 per cent) and immaterial provision expenses.
The company has a robust tech-driven customer acquisition platform (100 per cent in house sourcing) and follows a stringent credit underwriting process (cash flow assessment). It has been fruitful for the company for several years as the NPA (1 per cent NNPA) formation remained minuscule.
A lower credit cost has resulted in superior return ratios (9 per cent ROA in Q1-FY23), furthermore, the business growth for the company remains strong with healthy NIMs (about 8 per cent reported in Q1-FY23). We expect the business environment and operating metrics to remain strong for the company. We have a positive outlook on the company with a Buy recommendation.
Aptus would continue to command a premium valuation, as it delivers best-in-class ROA among its peers, led by continued focus on affordable housing in Tier-II/III cities along with rigorous underwriting practices, which has helped it to withstand Covid-led disruptions.
We expect strong AUM growth (27 per cent estimated), stable NIM (calculated) of 10.7 per cent and opex at 2.2 per cent of average assets will help Aptus to deliver strong PAT (30 per cent CAGR) over FY22-FY24.