ICICI Securities has recently highlighted a promising investment opportunity in Aadhar Housing Finance, projecting a potential 20% increase in the stock’s value. With a Buy recommendation and a target price set at Rs 550, the brokerage emphasizes the company’s strong position in the affordable housing finance market. This optimism is driven by a robust business framework, operational efficiency, and prudent risk management practices, which together foster sustainable growth across various market cycles.

Aadhar Housing Finance’s Geographic Diversification

One of the standout features of Aadhar Housing Finance is its extensive presence across 21 states in India, comprising 557 branches. This geographic spread significantly mitigates concentration risk, as no single state accounts for more than 14% of its total assets under management (AUM). In fact, the top three states contribute only 40% of the AUM, a figure notably lower than many competitors, which often see 50% concentration from their leading regions.

• Geographic Benefits:
  • 21 states and 557 branches
  • No state exceeds 14% of AUM
  • Top three states contribute only 40%

"Geographic diversification, paired with a low concentration risk, enhances the company’s stability," noted ICICI Securities, highlighting how focused expansion in tier 4 and 5 cities propels sustainable growth.

Sound Risk Management Practices

ICICI Securities points out that Aadhar Housing Finance employs a robust underwriting framework, which includes dual property valuations and stringent legal checks, ensuring effective risk management. This diligence is reflected in the company’s stage 3 assets, which remain stable at 1.1-1.5% despite targeting the under-represented non-white-collar segment.

Balanced Business Strategy

The strategic focus of Aadhar Housing Finance lies in maintaining a diverse and balanced business model. The company’s loan portfolio is secured, with 75% dedicated to home loans and 25% against properties. Notably, salaried borrowers make up 57% of the AUM, although there has been a gradual increase in self-employed clients.

Competitive Cost of Funds

Aadhar Housing Finance shows a commendable balance between its assets and liabilities, with 79% of its borrowing and 77% of its assets tied to floating rates. This balance, alongside a well-diversified borrowing strategy and a stable credit rating of AA Stable, supports a competitive cost of funds at 8.1%, enhancing the company’s margin outlook.

Promising Earnings Forecast

Looking ahead, ICICI Securities anticipates AUM growth to remain robust at 19%, driven by steady asset quality and gradual margin improvements. The brokerage forecasts an impressive CAGR of 23% in earnings from FY25 to FY27.

Stock Performance Highlights

As of the last trading session, shares of Aadhar Housing Finance rose by 0.65%, closing at Rs 462.40 on the National Stock Exchange. Over the past six months, the stock has appreciated by 3.9%, delivering a remarkable 40% return over the last year. Notably, it has surged by 10% since the start of 2025.

With its solid fundamentals and expansion strategy, Aadhar Housing Finance represents a compelling investment opportunity for those looking at the affordable housing finance sector.