Whalesbook
Aadhar Housing Finance Ltd. reported its Q4 FY26 results, with Assets Under Management (AUM) crossing ₹30,571 crore, achieving 20% year-on-year growth. The company also posted a record ₹3,087 crore in quarterly disbursements for the period.
Asset quality saw sequential improvement, with Gross Non-Performing Assets (GNPA) falling to 1.08%, while collection efficiency remained above 99.8%. Financial efficiency also improved, with the cost-to-income ratio decreasing by 55 basis points year-on-year to 35.9%. The company expanded its network by adding 46 branches during the year, bringing the total to 626 across 22 states.
The company's strategy involves a deliberate focus on home loans and expanding its reach in underserved markets, signaling a risk-managed approach to growth. Looking ahead, Aadhar Housing Finance has set targets for 20% growth in both AUM and profit for FY27.
Aadhar Housing Finance, which went public in February 2024, aims to tap into India's large affordable housing market, particularly in Tier II and Tier III cities.
However, the company faces competition from banks, especially in urban areas. A projected spread contraction of 8-10 basis points in FY27 is anticipated due to lower yields on new loans compared to the existing book. One-off expenses in Q4, including ₹13.5 crore for Employee Stock Option Plans (ESOPs) and ₹16 crore related to Labour Law code compliance, also affected the results. The company's funding mix, reliant on floating-rate bank borrowings, indicates sensitivity to interest rate cycles.
In comparison, peers like Bajaj Housing Finance and PNB Housing Finance, with AUMs around ₹70,000 crore, reported year-on-year growth of approximately 18% and 12% respectively. Aadhar's 20% AUM growth is competitive, particularly given its focus on the lower-income segment.
Key areas for investors to monitor include the execution of the 20% growth targets for FY27, how effectively management navigates urban competition, and the impact of the guided spread contraction on net interest margins. Performance metrics from the expanding branch network and diversification of funding sources will also be important.