Broker’s call: Aadhar Housing (Buy)

Target: ₹600

CMP: ₹459.15

Aadhar Housing Finance (Aadhar) delivered a strong quarter with a PAT beat of 9 per cent JMFe at ₹230 crore (+15 per cent y-o-y, 13.7 per cent q-o-q) driven by: strong AUM growth of (+5 per cent q-o-q, +20.8 per cent y-o-y) at ₹22,800 crore led by healthy disbursements of ₹2,040 crore (+18 per cent q-o-q, +36 per cent y-o-y).

Asset quality was largely steady with gross stage 3 at 1.35 per cent (+1bp q-o-q) and net stage 3 at 0.73 per cent (+2bps q-o-q). Management maintains its annual growth guidance of 18-20 per cent for FY25 and expects marginal decline in spreads to 5.8-5.85 per cent by FY25 end (from 5.9 per cent in Q2-FY25) led by slightly higher incremental CoFs in H2-FY25.

However, margins are expected to remain largely steady during rate cuts as 79 per cent of its AUM is at floating rate vs 77 per cent of borrowings at floating rate. We remain confident on the growth trajectory of the company given its diverse pan-India presence in 21 States, constant efforts to increase geographical penetration by going deeper into the markets and its scalable technology platform.

We also remain comfortable on asset quality of the company as management guided for non-HL book to limit up to 25 per cent of total book by FY25 end led by DA in non-HL book.