Buy Aadhar Housing Finance; target of Rs 625: ICICI Securities

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Strong disbursement momentum: Aadhar Housing Finance has delivered a robust 22% YoY disbursement growth, with a strong pipeline and expected disbursement growth of over 20% in H2FY27.
  • Steady spreads: The company has maintained its spreads at 5.7%, one of the highest among AHFCs, driven by its focus on low-income housing and granular demographic expertise.
  • Asset quality stability: Aadhar's asset quality remains stable, with a GNPA of 1.34% and a credit cost of 31bps in Q2, expected to normalize to 25bps by FY27-end.
  • Segmented distribution strategy: The company's strategic segmentation of its branch network into 'urban markets' and 'emerging markets' is expected to drive steady growth and NIMs.

Thesis Validation Checklist

  • Disbursement growth: Monitor disbursement growth in H2FY27, expected to be over 20%.
  • Spread stability: Track the company's ability to maintain its spreads, driven by its focus on low-income housing and granular demographic expertise.
  • Asset quality: Monitor the company's asset quality, with a focus on GNPA and credit cost, expected to normalize to 25bps by FY27-end.
  • Branch network expansion: Track the company's branch network expansion, with a focus on the 'urban markets' and 'emerging markets' strategy.