Buy Aptus Value Housing Finance; target of Rs 250: ICICI Securities

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Aptus's core operating performance remains strong, with a return on equity (RoE) of 20%, driven by robust 21% year-over-year (YoY) assets under management (AUM) growth and sustainable net interest margins (NIMs).
  • The company is optimizing its business mix, with a focus on increasing average ticket size and onboarding quality customers, which is expected to improve profitability.
  • Aptus is evaluating opportunities to expand its lending portfolio beyond home loans and SME loans, which could provide a new growth avenue.
  • The company's asset quality (AQ) has deteriorated, with a rise in 30+ days past due (DPD) and a decline in collection efficiency (CE), but management expects AQ metrics to normalize by end-FY27.

Thesis Validation Checklist

  • Investors should watch for signs of improvement in asset quality, such as a decline in 30+ DPD and an increase in CE, as well as the company's ability to maintain its strong core operating performance.
  • The success of Aptus's business mix optimization and expansion into new products will be crucial in driving future growth.
  • Any changes in the regulatory environment or interest rates that could impact the company's NIMs and profitability should be monitored.
  • The company's ability to manage its credit costs and maintain its return on equity (RoE) at around 20% will be important in determining its long-term sustainability.