Aadhar Housing Finance Shares: Icici Gives 'buy' Call With 19% Upside Potential

ICICI Direct said Aadhar Housing Finance Ltd remains an charismatic play successful nan affordable lodging finance segment. The home brokerage gave a 'Buy' telephone connected nan antagonistic pinch a 12-month target value of Rs 550, suggesting 19.08 per cent upside imaginable from Friday's closing of Rs 461.85.

It expects AUM (Asset nether management) maturation to prolong astatine astir 19 per cent, adding that dependable plus quality, gradual betterment successful margins and ratio are expected to consequence successful net CAGR of 23 per cent successful FY25-27E.

"Given its beardown RoA of 4 per cent and RoE of 18 per cent-plus, while delivering in installments maturation of supra 20 per cent, valuations stay charismatic astatine existent level. We worth Aadhar astatine 2.7x FY27E BV and delegate a target value of Rs 550. We urge a BUY rating," ICICI stated.

"Aadhar has ample distribution beingness pinch 557 branches crossed 21 states, amid strategy to grow scope complete deepening penetration, thereby keeping attraction consequence pinch successful check. No authorities contributes >14 per cent of AUM, and apical 3 states relationship for ~40 per cent (vs >50 per cent for peers). Post geographic description undertaken complete nan years, now scheme is to deepen penetration successful prime tier 4/5 cities. Thus, geographic diversification & debased attraction consequence enhances stability, while focused tier 4/5 description drives sustainable growth," it besides said.

"Aadhar has a balanced operation of plus liability pinch 79 per cent of borrowing and 77 per cent of assets astatine a floating rate. On nan liabilities side, a well-diversified borrowing mix, unchangeable in installments standing (AA Stable) coupled pinch effective liability guidance is seen to support CoF comparatively competitory (8.1 per cent) and frankincense assistance separator trajectory ahead," nan brokerage further stated.

Sharing manufacture outlook, ICICI said nan Indian lodging finance marketplace grew astatine 13.6 per cent CAGR during FY19-24 connected relationship of emergence successful disposable income, patient request and greater number of players entering nan segment.

"Over nan past 2 fiscals, lodging finance conception has seen favourable affordability connected relationship of unchangeable spot rates (in past 5-8 years) and gradually improving income of individual borrowers. In FY24, lodging in installments grew importantly by 16.7 per cent driven by aspirations of a increasing young organization pinch rising disposable income and faster maturation successful smaller districts. Overall, nan lodging manufacture is expected to turn astatine CAGR of 13-15 per cent complete FY23-FY27E," it added.