The brokerage house ICICI Securities, in a research note, sees 20% upside in Aadhar Housing Finance. It has a Buy rating on the stock with a target price of Rs 550. The brokerage believes the company is attractive in the affordable housing finance segment on the back of a robust business model. This combined with efficiency, stability, and prudent underwriting practice leads to a healthy and sustainable performance across cycles.
The company has low concentration risk as it has expanded across 21 states, with 557 branches. The company has a pan-India presence and none of the states contributes more than 14% of the total AUM (assets under management). The top 3 states account for 40% of AUM, which is lower than that of peers with a 50% contribution to the AUM.
“Thus, geographic diversification & low-concentration risk enhances stability, while focused tier 4/5 expansion drives sustainable growth,” said ICICI Securities.
ICICI Securities on Aadhar Housing Finance: Prudent under-writing
According to the report, the company’s robust underwriting framework, dual property valuation, and strong legal check ensure sound risk management. This is depicted in stage 3 assets being rangebound (1.1- 1.5%) despite the company’s focus on the under-penetrated non-white-collar segment.
Aadhar Housing Finance has the core strategy of maintaining a balanced and granular business mix, which leads to sustained business growth. Not just that, the company’s portfolio is also “entirely secured” as it has 75% home loans and the remaining 25% loans against properties. A significant share of the AUM is towards salaried borrowers (57% of AUM), though the self-employed segment has been gradually scaling.
ICICI Securities on Aadhar Housing Finance: Balanced assets and liabilities
Aadhar has a balance of assets and liabilities with 79% of borrowing and 77% of assets at a floating rate. On the liabilities side, a well-diversified borrowing mix and stable credit rating (AA Stable) coupled with effective liability management is seen to keep CoF (cost of funds) relatively competitive (8.1%) and thus help margin trajectory ahead.
Regarding earnings, the brokerage said that it expects the AUM growth to be sustained at 19%, while steady asset quality, gradual improvement in margins, and efficiency are expected to result in earnings CAGR of 23% in FY25-27.
Aadhar Housing Finance: Stock performance
On Friday, the share price of Aadhar Housing Finance closed the session 0.65% higher at Rs 462.40 on the National Stock Exchange. It is 3.9% on a 6-month basis and delivered 40% returns in 1 year. The stock is up 10% so far in 2025.