Brokerages stay bullish on Aadhar Housing Finance after Q3 results, raise target price | Stock Market News
Source: Live Mint
Analysts remain bullish on Aadhar Housing Finance, with some raising target prices following the company’s December quarter numbers that came in line with their estimates. The company continues to maintain its leadership position among the affordable housing finance companies (AHFCs), with an AUM of ₹240 billion as of December 2024.
Analysts note that the company’s portfolio is well-diversified, with no single state accounting for more than 14% of its AUM. It also has one of the largest distribution networks, comprising over 550 physical branches (34 added in 9MFY25), which they believe are key enablers of its steady and sustainable AUM growth.
They further stated that the company is on track to achieve its FY25E disbursement and AUM growth guidance of approximately 18–20% and 20–22%, respectively, while maintaining credit costs within the guided range of 25–27 basis points.
Aadhar’s Q3FY25 PAT came in at ₹2.4 billion, up 18% year-on-year (YoY) and 5% quarter-on-quarter (QoQ), driven by strong NII growth of 27% YoY and 8% QoQ. However, lower fee income due to discounts offered by Aadhar led to overall revenue growth of 20% YoY and 5% QoQ.
Following the company’s December quarter results, Japanese brokerage firm Nomura retained its ‘buy’ call on the stock with a target price of ₹560 per share. The stock remains the brokerage’s preferred pick in the affordable housing segment due to its geographically diversified loan book and strong profitability metrics.
Nomura estimates an EPS CAGR of 21% during FY25-27F, with an average RoA/RoE of 4.5%/17% over the same period. Similarly, global brokerage firm Citi has also maintained its ‘buy’ call on the stock, with a target price of ₹565 per share. Investec has set a target price of ₹600 per share, along with a ‘buy’ rating.
“Aadhar remains one of the steady plays in the 20%+ compounding section, with minimal asset quality risks due to its exposure to home loans, largely in the (formal and informal) salaried segment,” said domestic brokerage firm Kotak Institutional Equities.
Affordable housing loans, as a segment, are considered a safer asset class in the current environment, given the uncertainty in other lending businesses at the lower end. Kotak revised its estimates downward by 0.5-1.7% to reflect yield pressure and slightly higher operating expenses. However, it retained its ‘buy’ rating and marginally raised the target price to ₹560 per share from the earlier ₹550.
Stock price history
Aadhar Housing Finance shares have been sliding over the last four months, closing in the red with each passing session. After reaching an all-time high of ₹516.65 per share in September, the stock has corrected by 26% to date.
Nevertheless, it is still up 22% from its IPO price of ₹315. The company’s shares debuted on Dalal Street in May 2024, listing at ₹329 per share, which was 4.6% higher than their issue price.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
