Broker’s Call: Aadhar Housing (Buy)

Why It Matters

The recommendation highlights Aadhar Housing’s scalable, cost‑efficient model as a catalyst for higher returns in India’s fast‑growing housing‑finance sector, attracting capital and setting a benchmark for peers.

Key Takeaways

• AUM expected 20‑22% CAGR, ₹50 k cr in 3 years
• Pan‑India footprint reduces reliance on any single state
• Dual‑market strategy targets volume in A markets, returns in B/C
• Net interest spread expected above 5.6% medium term
• Risks include loan asset stress and GS3 slowdown

Pulse Analysis

India’s housing‑finance market is entering a decisive growth phase, driven by urbanisation, rising incomes, and government incentives for affordable homes. Traditional lenders are expanding their footprints, but few have combined nationwide reach with granular market segmentation. Aadhar Housing’s pan‑India network positions it to capture demand across both premium and emerging segments, mitigating the volatility that often plagues state‑centric players. This broad coverage also enables the firm to balance loan‑to‑value ratios and diversify credit risk, a critical advantage as the sector navigates macro‑economic headwinds.

The broker’s analysis underscores Aadhar’s dual‑market approach, where “A” metros fuel volume growth while tier‑B and‑C cities deliver higher risk‑adjusted returns. By leveraging a cost‑efficient graded‑branch architecture and a robust technology stack, the company maintains net interest spreads above 5.6% and keeps credit‑costs in the 25‑27 basis‑point range. Such operational discipline translates into projected improvements of 40‑50 basis points in cost‑to‑income ratios and 6‑8 basis points in cost‑per‑asset over the next three years, reinforcing its ability to sustain profitability amid competitive pressure.

Valuation-wise, the two‑stage Gordon model yields a ₹650 target, reflecting a 12.2% cost of equity and an assumed 20% growth horizon. A price‑to‑book multiple of 3.3× suggests a premium to peers, justified by anticipated RoA of 4.5% and RoE of 16.5% through FY27. Investors should weigh the upside against highlighted risks—potential loan‑asset stress and a slowdown in the GS3 segment—which could compress earnings if macro conditions deteriorate. Overall, Aadhar’s strategic positioning and disciplined financial metrics make it a compelling play for those seeking exposure to India’s housing‑finance upside.

Broker’s call: Aadhar Housing (Buy)

By KS Badri Narayanan · Updated · February 20, 2026 at 06:42 PM

Target: ₹650

CMP: ₹479.40

We hosted MD & CEO, CFO of Aadhar Housing for investor meetings in Mumbai.

Key takeaways

• Medium‑term AUM trajectory of 20‑22 % with over ₹50,000 crore milestone within 3 years.

• Pan‑India presence and deeper coverage de‑risk it from state‑specific growth challenges.

• Dual‑market approach to manage dynamics: Urban/ Emerging ‘A’ markets target volume/AUM growth, while ‘B’ & ‘C’ prioritize value and enhanced risk‑adjusted returns.

• Spreads to sustain above 5.6 % over the medium term; credit‑cost guidance of 25‑27 bps.

• Annual improvement of 40‑50 bps in C/I and 6‑8 bps in cost/assets over the next 3 years.

We rate Aadhar Housing shares as Buy. We expect Aadhar shares to command a premium, given superior and projected sustainable RoA/RoE of over 4.5 %/16.5 % over FY25‑27E. Aadhar differentiates itself with:

• Scale with granularity;

• Non‑conventional diversified distribution;

• Cost‑efficient graded branch structure, phased expansion and tech stack improving productivity & analytics.

Using a two‑stage Gordon Growth model, we arrive at a target price of ₹650 for Aadhar assuming CoEs of 12.2 %, medium‑term RoEs of 16 % and a high‑growth phase of 10 years with expected growth of 20 %. We assign a price‑to‑book of 3.3× (9MFY27E BV).

Risks

• Build‑up of stress in LAP above expectations;

• Roll‑back from elevated GS3 getting disrupted due to activity slowdown, also leading to growth slowdown.