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    Aadhar Hsg. Fin.

    AADHARHFCGood
    Financial Services·25 Jul 2025
    Management Summary

    Aadhar Housing Finance delivered a strong start to FY26, characterized by robust AUM and disbursement growth driven by its 'Urban and Emerging' strategy. The company maintained healthy asset quality and margins despite seasonal headwinds, while achieving a rating upgrade to AA+ from CARE. Management remains focused on geographical expansion and digital transformation to sustain its leadership in the affordable housing segment.

    Highlights

    8

    • AUM reached an all-time high of ₹26,524 crores, reflecting a 22% YoY growth

    • Disbursements grew 32% YoY to ₹1,979 crores during the quarter

    • Profit After Tax (PAT) stood at ₹237 crores, a 19% YoY increase

    • Net Interest Margin (NIM) reported at 8.8% for Q1 FY26

    • Gross NPA remained stable at 1.34% despite seasonal pressures in the first quarter

    • Cost-to-income ratio improved to 36.1% from 36.7% in the previous year

    • Average ticket size on AUM remains steady at ₹10 lakhs

    • Capital adequacy remains robust at 44.6% (Tier 1 at 44.1%)

    What Changed1

    vs Q2 FY26

    Guidance items4 → 5 (+1)

    Key financials

    Single quarter

    06 metrics
    1. 01AUM₹26,524 Cr+22%YoY
    2. 02Disbursements₹1,979 Cr+32%YoY
    3. 03PAT₹237 Cr+19%YoY
    4. 04NIM8.8%
    5. 05GNPA1.3%+2%YoY

    Segment breakdown

    • Home Loan15.7 lakhs63.6%
    • Micro-LAP9 lakhs36.4%
    Donut· Share of Average Ticket Size

    Guidance & targets

    5
    CategoryTargetPriority
    Market Share
    AUM Growth
    20%-22%
    		High
    Volume
    Disbursement Growth
    18%-20%
    		High
    Profitability
    ROA
    4.2%-4.3%
    		High
    Other
    Branch Expansion
    50-60
    		High
    Other
    Credit Cost
    25-27 bps
    		Medium

    Risks & concerns

    4
    RiskSeverity

    Seasonality Impact on Asset Quality

    Q1 typically sees higher delinquency (Stage 2 to Stage 3 flow) which management expects to normalize over the next nine months. — Management acknowledged

    low

    Competitive Pressure on BT-outs

    BT-out rates were 5.3% in Q1; management noted competition typically spikes in Q4. — Analyst acknowledged

    medium

    Geopolitical Dynamics in Northeast Expansion

    Expansion into Assam is being done in a 'calibrated' manner due to regional dynamics. — Management acknowledged

    low

    Areas of Evasion(1)

    • Avoided commenting on the 'Prime' segment competition as they do not operate in that space.

    Q&A highlights

    3

    “If I look at our numbers on Quarter 1 YOY basis, we were GNPA of 1.31% moving to 1.34%. So, I would not say that there is any movement. It is more flattish and it is actually seasonality effect.”

    Clarifies that the slight uptick in GNPA is a normal seasonal trend rather than localized credit stress.

    asked by Varun, Kotak Securities

    2 min read6 chapters

    Detailed Narrative

    01

    'Urban and Emerging' Strategy Realignment

    Aadhar has implemented a new internal classification strategy, designating 130 branches in the top 15 cities as 'Urban' and the remainder as 'Emerging'. This strategy aims to shift the incremental business mix from 55% Urban to 55% Emerging to capture higher yields. Currently, Urban locations yield 12%-12.5% while Emerging locations offer significantly higher yields ranging from 14.5% to 16%.

    02

    Robust AUM and Disbursement Momentum

    The company achieved an all-time high AUM of ₹26,524 crores, growing 22% YoY. Disbursements were particularly strong at ₹1,979 crores, a 32% YoY increase. Management has guided for sustained AUM growth of 20%-22% for the full year FY26, supported by a steady average ticket size of ₹10 lakhs and a focus on retail-secured lending.

    03

    Asset Quality Resilience Amid Seasonality

    Gross NPA stood at 1.34%, a marginal increase from 1.31% YoY, which management attributed entirely to Q1 seasonality. The 30+ DPD pool remained steady quarter-on-quarter, and management expects the 1+ DPD (currently 7.1%) to normalize as the year progresses. Collection efficiency remains consistently above 98%, and the portfolio is well-secured with an average LTV of 59%.

    04

    Diversified Funding and Rating Upgrade

    A major highlight was the rating upgrade to AA+ by CARE and a positive outlook from ICRA. The borrowing mix is well-diversified with 48% from banks, 24% from NHB, and 23% from NCDs. The company's cost of funds exited the quarter at 8%, and it maintains strong liquidity with ₹2,181 crores in cash and ₹1,500 crores in undrawn sanctions.

    05

    Geographical Expansion into the Northeast

    Aadhar entered its 22nd state with a new branch in Guwahati, Assam. The company plans to add 50-60 branches annually for the next three years, targeting a total network of approximately 750 branches by FY28. The expansion into the Northeast will be calibrated, focusing on 4-5 key cities that make business sense before scaling further.

    06

    Profitability and Efficiency Outlook

    The company is targeting an ROA of 4.2%-4.3% for FY26, with a long-term sustainable ROE target of 17%-18%. Operational efficiency continues to improve, with the cost-to-income ratio dropping to 36.1%. Management believes the current spread of 5.8% and NIM of 8.8% are sustainable as they balance cost of funds benefits with the shift toward higher-yielding emerging markets.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.