Aadhar Housing Finance Share Price Could Reach Rs 545: ICICI Securities
ICICI Securities reaffirms its bullish stance on Aadhar Housing Finance, highlighting robust growth, strong financial metrics, and promising prospects. With a target price of Rs 550, this represents a 32% upside from the current market price of Rs 424. Aadhar's early entry into under-penetrated markets and a strong focus on geographical diversification make it a standout among its peers in the affordable housing finance sector.
Company Overview
Aadhar Housing Finance: A Pioneer in Affordable Housing
Aadhar Housing Finance has been a leader in the affordable housing finance market since its inception in 2010. Under the leadership of Mr. Deo Shankar Tripathi and Mr. Rishi Anand, Aadhar achieved an 18% AUM CAGR between FY18–24, with its AUM reaching Rs 228 billion as of September 2024. With 545 branches, the company stands out for its extensive network and geographical diversification.
Financial Performance
Impressive Growth and Market Leadership
AUM Growth: The company's AUM of Rs 228 billion is among the highest in its sector.
Disbursements: Aadhar achieved Rs 20.3 billion in quarterly disbursements during Q2FY25, surpassing competitors like Aavas (Rs 12.9 billion) and Home First (Rs 11.8 billion).
Spreads: Aadhar's industry-leading spreads of ~6% reflect its ability to price loans competitively.
Key Financial Metrics (FY24A-FY26E):
| Metric | FY24A | FY25E | FY26E |
|---|---|---|---|
| Net Interest Income (NII) | Rs 14,257 mn | Rs 17,765 mn | Rs 20,990 mn |
| PAT | Rs 7,485 mn | Rs 9,629 mn | Rs 11,355 mn |
| EPS | Rs 19.0 | Rs 22.6 | Rs 26.6 |
| P/E Ratio | 22.4x | 18.8x | 16.0x |
Key Differentiators
Geographical Diversification
Unlike peers, Aadhar has no state contributing more than 15% to its AUM, providing resilience against regional risks.
Early entry into low-income, under-penetrated states like Uttar Pradesh and Jharkhand allowed the company to onboard customers at desired yields.
Focus on Formal Salaried Segment
Aadhar targets the formal salaried segment in Tier-2 and Tier-3 cities, ensuring lower credit risks and sustainable growth.
This strategy has helped maintain a low GNPA ratio of 1.2% and a coverage ratio of ~30%.
Technical Insights
Price Trends and Candlestick Analysis
Recent Performance: The stock is trading at Rs 424, with a 52-week high of Rs 517 and a low of Rs 292.
Candlestick Patterns: The daily chart reveals a bullish continuation pattern, signaling potential upward momentum.
Fibonacci Levels
| Level | Price (Rs) |
|---|---|
| 23.6% | 442 |
| 38.2% | 456 |
| 50.0% | 470 |
| 61.8% | 484 |
| 76.4% | 502 |
The stock is currently above the 23.6% retracement, suggesting potential to test higher levels.
Support and Resistance
| Level | Price (Rs) |
|---|---|
| Support 1 | 410 |
| Support 2 | 395 |
| Resistance 1 | 450 |
| Resistance 2 | 470 |
Future Prospects and Risks
Growth Drivers
Incremental spreads of ~6% and a well-diversified loan book.
Strong focus on low-ticket loans (
Slower-than-expected AUM growth.
Compression of spreads due to intensifying competition.
Competitor Analysis
Comparison with Peers
Company AUM (Rs bn) Spreads (%) Disbursements (Q2FY25, Rs bn)
Aadhar 228 ~6.0 20.3
Aavas 184 ~5.5 12.9
Home First 112 ~5.5 11.8
Aadhar's disbursements and spreads lead the sector, emphasizing its operational efficiency.
Analyst Recommendation
ICICI Securities maintains its 'Buy' rating for Aadhar Housing Finance, with a target price of Rs 550. This valuation is based on a forward P/E of 3x FY26E BVPS, reflecting confidence in the company's growth trajectory.
Conclusion
Aadhar Housing Finance continues to outperform its peers through strategic geographical diversification, a focus on under-penetrated markets, and strong financial metrics. With robust disbursements and an industry-leading spread, the company is poised for sustained growth. However, investors should remain vigilant about competition-induced margin pressures.
