Aadhar Housing Finance has reported a stronger-than-expected performance for the second quarter, with Assets Under Management (AUM) growth aligning with expectations at 21% year-on-year and 4% quarter-on-quarter. The company demonstrated improvements in both margins and credit costs.
The spread increased by 20 basis points quarter-on-quarter, attributed to a reduction in the Cost of Borrowing (COB). Profit After Tax (PAT) rose by 17% year-on-year and 12% quarter-on-quarter, reaching ₹270 crore, which exceeded analyst estimates by 7%. The average credit cost decreased significantly to 19 basis points, down from 41 basis points in the previous quarter, reflecting a decline in delinquency rates.
Aadhar Housing’s management has maintained its AUM growth forecast for the fiscal year 2026 at 20-22%. The company anticipates a surge in disbursements during the second half of the fiscal year, a typically robust period for business. Margin support is expected from the easing of COB, while the outlook for asset quality remains stable amidst falling delinquency rates. The management reports strong underlying demand for affordable housing.
Estimates through fiscal years 2026-2027 have been kept stable, projecting AUM growth at a compound annual growth rate (CAGR) of 21% from fiscal years 2025 to 2028. At the current market price (CMP) of ₹495.20, the stock is trading at an indicative forward Price-to-Book Value (P/BV) ratio of 2.6x. Analysts have retained a ‘Buy’ rating with a revised target price of ₹605 per share, applying a P/BV of 2.8x based on the September 2027 estimated Book Value, down slightly from an earlier estimate of 2.9x. The increase in target price primarily results from rolling forward the valuation to the September 2027 estimated Book Value.
Key risks to watch include ongoing stress in the low-income segment, as approximately 75% of the loan portfolio is tied to floating rates, which could threaten margins during a potential easing of interest rates. Additionally, increased competition within the affordable housing finance sector could pose challenges.
Published on November 10, 2025.
