Broker’s call: Aadhar Housing Fin (Buy)

Target: ₹605

CMP:₹495.20

Aadhar Housing Finance reported better than expected Q2 performance. While AUM growth came in-line at 21 per cent y-o-y/4 per cent q-o-q, it delivered beat on margin and credit cost fronts.

Spread improved by 20 bps q-o-q on decline in COB. PAT grew by 17 per cent y-o-y/12 per cent q-o-q to ₹270 crore (7 per cent higher than our est.). Credit cost (on avg. AUM) reduced to 19 bps (vs 41 bps q-o-q) on decline in delinquency.

Management retained AUM growth guidance of 20-22 per cent for FY26.

Aadhar Housing expects pick-up in disbursements during H2 which usually remains good for business. Margin is expected to get support from easing COB. Assets quality outlook remains stable given the declining delinquency. Management sees strong underlying demand for affordable housing.

We maintained our estimates over FY26-27E. AUM is expected to grow at a CAGR of 21 per cent over FY25- 28E. At CMP, the stock is currently trading at IY forward P/BV 2.6x. We maintain our ‘Buy’ rating with revised TP of ₹605/sh valuing at P/BV 2.8x Sep’27E BV (vs 2.9x earlier). An increase in TP is mainly due to rolling forward of valuation to Sep’27E BV.

Key risks: Prevailing stress in low income segment – since about 75 per cent of the book is linked to floating rate, it is posing risk to margin amid likely easing interest rate cycle; and Increasing competition in affordable housing finance segment.

Published on November 10, 2025