Broker’s call: Aadhar Housing (Buy)

Target: ₹550

CMP: ₹432.75

Aadhar Housing Finance (Aadhar) was amongst the first few AHFCs to get HFC licence, way back in 2010, and since then its execution track record under the leadership of Deo Shankar Tripathi (Executive VC) and Rishi Anand (MD & CEO) has been superior.

It delivered 18 per cent AUM CAGR between FY18–24 with AUM of ₹22,800 crore, as of Sep’24, driven by an early entry into under-penetrated markets of UP, MP, Chhattisgarh and Jharkhand etc., complemented by its focus on diversification (no single state is contributing over 15 per cent of AUM) and one of the highest branch networks of 545; these have been key enablers for Aadhar. More importantly, incremental growth came in at higher spread of about 6 per cent vs 5-5.25 per cent for peers.

Its quarterly disbursements stood at ₹2,030 crore during Q2FY25 vs ₹1,290 crore for Aavas vs ₹1,180 crore for Home First vs ₹940 crore for Aptus and ₹830 crore for India Shelter.

Maintain Buy with TP of INR 550, valuing the stock at ~3x FY26E BVPS.

Key risks: Slower than expected AUM growth and 2) spreads coming under pressure due to competition.