Aadhar Housing Finance is expected to grow its assets under management by 22% by the end the current fiscal, managing director and CEO Rishi Anand said in an email interaction.
“This anticipated growth will be driven by our extensive operations and a strategic expansion plan that has added 545 new branches across 21 states and Union Territories,” he said.
In a boost to the company, foreign brokerage Citi Research has initiated its coverage with a ‘buy’ rating with a target price of Rs 565. The target price reflects an upside of 42.85% from Friday’s close price of Rs 395.50.
Aadhar Housing focuses on providing loans to the low-income housing segment, with the ticket size being Rs 10 lakh on an average. Around 65% of the loan demand comes from tier-I and II cities while the rest is from tier-III cities and beyond.
With the higher probability of the Reserve Bank of India cutting the policy rate in the current year, the demand for housing loans is expected to grow across segments, Anand said.
So far as low-income housing and affordable housing are concerned, the government schemes such as the Pradhan Mantri Awaas Yojana and Interest Subsidy Scheme are having a big impact in boosting the growth. According to Anand, the growing demand for affordable housing is driving the profitability in the sector.
Affordable housing finance is specifically designed to provide loans to the economically weaker section and lower-income group, enabling individuals to purchase homes with extended payback periods.
While government support is a critical driver, other factors such as urbanisation and rising demand also play their parts.
On expansion, Anand said the company has introduced “deeper impact branches,” which are small offices located in talukas and district centres. In the last one-and-a-half years, the company added 140 branches and plans to continue the expansion spree by opening 60-75 branches each year for the next three years. Of these, 45-50 will be in tier IV and V locations and the remaining 25-30 will bolster its presence in larger cities.
While highlighting challenges, Anand said private developers, including listed companies, often hesitate to enter the affordable housing market due to tighter profit margins and regulatory challenges. These factors make affordable projects less attractive compared to lucrative segments where they can achieve higher returns. Besides, affordable housing projects adjacent to large cities are not feasible because of higher costs of land and construction, he said.
The Aadhar Housing MD expects the government to tweak the definition of affordable housing for the purpose of GST concession in the Budget. Affordable under-construction projects priced up to Rs 45 lakh under schemes like Pradhan Mantri Awas Yojana are eligible for a concessional GST rate of 1% without input tax credit. This ceiling may be raised to Rs 60-65 lakh.