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The foreign brokerage set a target price of ₹565, signalling a potential upside of 42.85% from the previous close of ₹395.50.
At 1:47 PM, the shares pared gains and were trading at ₹398.65, up 0.8%, on the BSE. In comparison, the BSE Sensex was trading 0.59% lower at 76,586.50 levels.
Citi analysts highlighted Aadhar Housing’s consistent growth trajectory, noting its 16% compound annual growth rate (CAGR) in Assets Under Management (AUM) over the past 4-6 years and improvements in governance and profitability since Blackstone’s acquisition.
The brokerage projects profit after tax (PAT) growth of 22% for FY24-27, underpinned by a 21% CAGR in AUM, net interest margins (NIMs) of 7-7.1%, and credit costs of 0.3-0.4%.
Key risks identified include potential promoter dilution and an increasing share of informal self-employed borrowers in its portfolio.
Also read: UBS upgrades SBI Cards to ‘Neutral’ rating, raises target price to ₹800
Top factors for initiating coverage:
Regional strength and strategic focus
Aadhar Housing has built a strong regional footprint across 21 states, encompassing 545 branches, with Rajasthan, Uttar Pradesh, and Madhya Pradesh leading growth. Retail home loans dominate its AUM at 75%, with salaried borrowers comprising 57%. The economically weaker section (EWS) and lower-income group (LIG) represent 70% of the portfolio, analysts noted.
The informal self-employed segment has shown rapid expansion, with a 43%-49% CAGR over the past 4 to 6 years. This segment’s contribution, analysts believe, is projected to increase by 1-2% annually.
Tech-driven operational efficiency
The company’s adoption of advanced technology, including its partnership with TCS for system upgrades, has boosted efficiency. Approval-to-login rates now stand at 75%, while disbursal-to-login rates have improved to 48%.
While Citi also favours Aavas Financiers in the affordable housing finance segment, Aadhar Housing remains a top pick for its innovative distribution strategy, balanced geographic spread, and operational excellence.
First Published: Jan 17, 2025 2:23 PM IST
