Target Price: ₹650
Current Market Price (CMP): ₹538.65
Aadhar Housing’s Managing Director and CEO, along with the Chief Financial Officer, recently participated in investor meetings in Hong Kong, providing comprehensive insights into the company’s strategic positioning as a financier in the low-income housing sector, particularly targeting loans under ₹15 lakh. The company is reorienting its distribution strategy to address distinct “Urban” and “Emerging” market segments.
In Urban and Emerging ‘A’ markets, Aadhar aims for substantial volume and assets under management (AUM) growth, driven by improved credit profiles. Conversely, in ‘B’ and ‘C’ markets, the focus shifts to enhancing value and ensuring better risk-adjusted returns, contributing positively to the bottom line. Aadhar confidently projects a 20-22% growth in AUM over the medium term, underpinned by a 17-20% increase in loan disbursements. Additionally, the benefits of lower funding costs are expected to be passed on to clients, with the company targeting stable medium-term spreads of 5.5%.
The outlook for credit costs remains benign, estimated at 25-28 basis points, supported by stable bounce rates. However, there is proactive caution regarding mono-line export-linked customers and the anticipated single-digit growth across five states—West Bengal, Kerala, Odisha, Bihar, and Jharkhand—each facing unique challenges.
To combat field-level attrition, Aadhar has introduced a fresh apprenticeship program, alongside a 4.7% Employee Stock Ownership Plan (ESOP) pool aimed at enhancing staff retention.
Currently, the stock trades at 2.6 times projected FY26 earnings, with expected returns on assets (RoA) and equity (RoE) of over 4.4% and 16%, respectively. Aadhar has established a target price of ₹650 for its stock.
Key downside risks include the potential accumulation of stress in loan against property (LAP), which could exceed expectations, and the risk of a rollback from elevated gross non-performing assets (GS3), which may disrupt expected growth due to a slowdown in activity.
Published on September 18, 2025
