Aadhar Housing going strong on asset growth with quality

The stock of Blackstone promoted Aadhar Housing Finance (AHFL), the country’s largest affordable housing loan company, has gained 47% over its IPO price notwithstanding the range bound movement in the first month after listing in the middle of May. Given the lender’s sustained growth momentum in the first half of the current fiscal year and the government’s continued thrust on affordable housing, the stock is likely to stay on investors’ radar. It has risen by 8% over the past month despite choppiness in the broader market.

AHFL, which is owned by BCP Topco, an affiliate of the Blackstone group, had raised Rs 1,000 crore through a fresh issue of shares in May at price of Rs 315 per share to augment its capital base. The promoter stake now stands at 75.9% from 98.7% before the IPO.

The company offers mortgage products to buy or construct houses, home improvement and commercial property with an average ticket size of Rs 10 lakh. With 545 branches in 21 states and union territories, it has the largest network across the country among peers.

The company’s assets under management (AUM) grew by 21% to Rs 22,817.5 crore at the end of the September quarter. The share of salaried and self employed borrowers was 56% and 44% respectively while that of housing loan and loan against property (LAP) was 74% and 24% in that order. The management expects a gradual shift towards self employed and LAP, given better yields. The management has guided for 21-23% AUM growth for FY25.

AHFL’s total income rose by 21% to Rs 1,,477.4 crore in the first six months of FY25 while net profit grew by 24% to Rs 427.7 crore. Net interest margin expanded by 32 basis points year-on-year to 9.1% despite 40 basis points increase in the cost of borrowings, helped by better operating cost control. Return on assets increased by 22 basis points to 4.2%.

The company was able to retain the asset quality and showed 10 basis point year-on-year improvement in the gross non-performing asset (GNPA) ratio at 1.3% in the first half of FY25.“We remain confident on AHFL’s growth trajectory given its diverse pan-India presence, constant efforts to increase geographical penetration and its scalable technology platform,” mentioned JM Financial Institutional Securities in a report. The brokerage retained “buy” rating on the stock with a 12-month target price of Rs 600, implying an FY26 estimated price-book multiple of 3.2. The stock was traded at Rs 464 at the end of Thursday’s session on the BSE.