The Indian home finance sector expanded steadily in FY24, with the prime housing finance market reaching Rs. 9.3 trillion and the entire housing finance market rising at a CAGR of 12.6% from FY19-23. Affordable home loans (less than Rs. 2.5 million) constituted 35% of the market as of 9M FY24.
Share price movement
Aadhar Housing Finance Ltd has a market capitalization of Rs 17,825.77 crore, the shares were trading at Rs 415.15 per share, decreasing around 1 percent as compared to the previous closing price of Rs 418.90 apiece.
Target
Kotak Securities, one of the well-known brokerages in India, gave a ‘Buy’ call on the fintech stock with a target price of Rs 550 apiece, indicating a potential upside of 32 percent from Wednesday’s price of Rs 415.15 per share.
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Rationale
As per the brokerage, the company is one of the largest diversified players with over 20 percent growth trajectory. Moreover, they said that the company distinguishes itself from most of its affordable housing finance peers with a larger balance sheet, longer history, and superior return on equity (RoE).
Furthermore, the brokerage stated that Aadhar would produce a 22 percent EPS CAGR during FY24-27E, driven by 21 percent AUM growth, near-stable spreads, greater fees, and sustained improvement in operating leverage. RoE is likely to rebound to the high teens after an IPO-driven drop in H1FY25E, as leverage steadily increases and core profitability (4.4-4.7 percent RoA) stays solid.
Financials
Looking forward to the company’s financial performance, revenue increased by 20 percent from Rs 593 crore in Q1FY24 to Rs 713 crore in Q1FY25, during the same period, net profit jumped 37 percent from Rs 146 crore to Rs 200 crore.
As of the first nine months of FY24, the firm has a vast network of 487 branches, including 109 sales offices. These branches and sales offices are spread throughout 20 states and union territories, serving about 10,926 pin codes in India.
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About the company
Aadhar Housing Finance Ltd (AHFL) is a housing finance company that offers a variety of financial services to help people buy or build their own homes. Some of their services include Home loans, Plot loans, and others.
Written by:- Abhishek Singh
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