Affordable housing finance companies are often described as “hidden” from the media glare and from the broader financial community in the country. However, affordable housing finance companies, while small in size, are witnessing strong growth in housing loans and allied credit facilities.
And that’s because of the government’s objective to aggressively promote home ownership amongst economically weaker sections in urban and rural areas. The central government had earlier announced plans for the construction of a few crore homes between 2024 and 2029 in urban and rural areas.
For instance, The Pradhan Mantri Awas Yojana – Urban 2.0, which seeks to address the housing needs of 1 crore urban poor and lower middle-class families between 2024 and 2029. This scheme is targeted at economically weaker sections (EWS) and lower income groups with annual income ranging between Rs 3 to 6 lakh. Maximum housing loan available is Rs 25 lakh under this scheme.
And The Pradhan Mantri Awas Yojana – Rural involves the construction of 2 crore additional homes between FY24 and FY29, and beneficiaries are entitled to loans up to Rs 70,000 for construction of houses.
It’s no surprise that affordable house finance companies typically have an average loan size of Rs 10 to Rs 12 lakh. And since these players in affordable housing finance also give related credit facilities, like loans against property (LAP) and SME loans, their net interest margins (NIMs) are far superior to Bajaj Housing Finance, a leading player in the broader housing finance market.
Affordable housing finance companies have NIMs in the range of 5% to 8.5% in the March 2026 quarter, as compared to 3.8% for Bajaj Housing Finance in the quarter under review. It also needs to be highlighted that the loan portfolio of affordable housing finance companies is much smaller than Bajaj Housing Finance.
We present three leading affordable housing finance companies for our readers.
Aavas Financiers – NIMs of 8.45% in March 2026 quarter
Aavas Financiers’ disbursements grew 16% y-o-y to Rs 2,350 crore in the March 2026 quarter, and in its investor presentation, the Jaipur-based company has highlighted that 83% of its loans are for less than Rs 15 lakh during FY26.
The company has 435 branches across 15 states in FY26 with the largest number in Rajasthan, Gujarat and Madhya Pradesh.
Aavas Financiers has pointed out that 65% of its loans are for housing loans, 22% loans for SMEs and the remainder are loans against property (LAP) for FY26.
Its diverse lending profile has given the Jaipur-based company very impressive net interest margins (NIMs) – it was 8.45% in the March 2026 quarter as against 8% a year earlier.
Loans for SMEs and LAP are at typically much higher interest rates than home loans. Strong growth in loans and NIMs helped Aavas Financiers net interest income (NII) rise 18.5% y-o-y to Rs 320 crore in the March 2026 quarter.
For perspective, Bajaj Housing Finance has NIMs of 3.8% in the March 2026 quarter as compared to 4% a year earlier.
Meanwhile, asset quality of Aavas Financiers was broadly stable – its net stage3 % (broadly equivalent to percentage of net NPAs for banks) was 0.68% in Q4FY26 as compared to 0.73% a year earlier.
Strong growth in loans and NIMs helped the company’s net profit grow 18.3% y-o-y to Rs 181.7 crore in the March 2026 quarter.
At the end of FY26, the company’s loan disbursements grew 10.6% to Rs 6,775.1 crore. Also, during FY26 – there was a change in promoter to UK-based CVC Capital, who had a 48.9% stake as on 31 March, 2026, highlighted the company’s investor presentation.
Aadhar Housing Finance – loan disbursements grew 20.3% y-o-y during Q4FY26
Aadhar Housing Finance’s total loan disbursements grew 20.3% y-o-y to Rs 3,086.6 crore in the March 2026 quarter with its home loans that grew 25.7% y-o-y to Rs 2,292.7 crore in the quarter under review.
Its retail other mortgage loans (like loans against property) grew 6.9% y-o-y to Rs 793.9 crore during Q4FY26.
Aadhar Housing Finance has 626 branches with a strong focus on Maharashtra, Gujarat and Uttar Pradesh. The Bangalore-based company’s spread or broadly equivalent to NIM was 5.8% in the March 2026 quarter as against 5.7% a year earlier.
As a result, the company’s net interest income (NII) grew 24.5% y-o-y to Rs 508 crore in the March 2026 quarter.
Asset quality of the company was also stable – net NPA to AUM (assets under management) was 0.8% in Q4FY26, and broadly similar to a year earlier.
Strong growth in loans and healthy NIMs helped the company’s net profit grow 27% y-o-y to Rs 310.9 crore in the March 2026 quarter.
And its loan disbursements grew 16.6% y-o-y to Rs 9,555.7 crore during FY26.
Home First Finance Company India – net profit grew 43.3% in the March 2026 quarter
Home First Finance’s disbursements grew 23.5% y-o-y Rs 1,572 crore in the March 2026 quarter. The company has highlighted home loans accounted for 83% of its total loans with an average loan of Rs 12 lakh. The company’s marketing network includes 171 branches across 13 states / union territories at the end of FY26.
Its net interest margin was 5.3% in the March 2026 quarter as against 5.1% a year earlier.
As a result, its net interest income grew 37.2% y-o-y to Rs 236 crore in the March 2026 quarter.
Asset quality was also fairly stable – it was 1.4% in the March 2026 quarter as against 1.3% a year earlier.
Strong growth in loans and healthy NIMs enabled the company’s net profit grow 43.3% y-o-y to Rs 149.4 crore in the March 2026 quarter.
Here’s a table that shows how the various housing finance companies stack up in comparing to Bajaj Housing Finance. Do note that given the big difference in size of balance sheets, this comparison is only for context with respect to a large player i.e. Bajaj Housing.
Affordable Housing Finance Stocks: Margin, Growth and Valuation Snapshot
| Company | NIM / Spread (%) | Net Profit Growth (Q4FY26) |
| Aavas Financiers | 8.45 | 18.3 |
| Aadhar Housing Finance | 5.8 | 27.0 |
| Home First Finance | 5.3 | 43.3 |
| Bajaj Housing Finance | 3.8 | 14.0% |
Return on Equity – superior capital use by affordable housing finance companies
Aavas Financiers has a consolidated Return on Equity (RoE) of 13.9%, according to Screener.in.
Meanwhile, Aadhar Housing Finance has a RoE of 15.9% while for Home First Finance Company it is 15.7%.
Return on Equity (RoE) – who is the ‘efficiency’ leader amongst affordable housing finance companies
| Name of affordable housing finance company | Consolidated RoE (in %) |
| Aavas Financiers | 13.9% |
| Aadhar Housing Finance | 15.9% |
| Home First Finance Company India | 15.7% |
| Bajaj Housing Finance | 12.1% |
For perspective, Bajaj Housing Finance, a leading player in the broader housing finance industry, has a RoE of 12.1%, according to Screener.in.
Valuations – is it worth investing in affordable housing finance companies?
Aavas Financiers ended 0.8% higher at Rs 1,495 on Thursday, 25 June 2026. On the preferred valuation matrix, price-to-book value it trades at 3.1 times, according to Screener.in.
Aadhar Housing Finance ended 2% higher at Rs 517 on Thursday. On the above valuation matrix, the stock trades at nearly 3 times.
Home First Finance Company India ended 2.7% higher at Rs 1,194 on Thursday. On the above valuation matrix, the stock trades at 2.9 times.
Valuations of affordable housing finance companies
| Name of affordable housing finance company | Price-to-book value (x) |
| Aavas Financiers | 3.1 times |
| Aadhar Housing Finance | 3 times |
| Home First Finance Company Indias | 2.9 times |
| Bajaj Housing Finance | 3.2 times |
For perspective, Bajaj Housing Finance trades at nearly 3.2 times on the valuation matrix.
The affordable housing finance segment is expected to show strong growth over the next few years, in line with the government’s objectives.
Readers could add affordable housing finance companies to their watch list of stocks for 2026 and see if the anticipated growth over the next few years matches expectations.
Disclaimer:
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
The writer and his family have no shareholding in any of the stocks mentioned in the article.
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