Aadhar Housing Finance Q1 FY27 earnings call

Aadhar Housing Finance Limited reported a strong Q1 FY27, with Assets Under Management (AUM) growing 18% year-on-year to INR31,364 crores as of June 30, 2026. Profit After Tax (PAT) for the quarter increased 19% year-on-year to INR282 crores. The company maintained its exit spread at 5.8% and achieved a Return on Assets (ROA) of 4% and Return on Equity (ROE) of 14.7% for the quarter, demonstrating robust financial health and profitability.

The company transitioned its loan accounting to a cheque clearance basis for disbursement recognition in Q1 FY27, a move aimed at enhancing governance and transparency. On this new basis, Q1 FY27 disbursements stood at INR2,036 crores. However, on a like-to-like cheque handover basis, disbursements were INR2,359 crores, representing a 19% year-on-year growth. Management expects the impact of this transition on growth figures to normalize, with Q2 disbursements projected to be upward of 20%.

Aadhar Housing Finance continued to demonstrate strong asset quality, with Gross Non-Performing Assets (GNPA) improving by 3 basis points year-on-year to 1.31% as of June 30, 2026. Stage 2 assets also improved by 40 basis points year-on-year to 3.3%. The company's exit spread remained stable at 5.8%, even after a 15 basis points reduction in its Retail Prime Lending Rate (RPLR), attributed to its strategy of focusing on urban and emerging markets and disciplined loan-to-value ratios (60% average).

The cost-to-income ratio for Q1 FY27 was 36.3%. This included a P&L charge of INR14 crores related to fresh ESOPs granted in January 2026. Management aims to reduce the cost-to-income ratio by 30-40 basis points annually and cost to AUM by 6-7 basis points yearly, driven by productivity improvements and AI initiatives across its operations. Employee costs saw a sequential increase primarily due to annual increments.

The company's capital adequacy ratio stood at a healthy 42.9% for Q1 FY27, with Tier 1 capital at 42.9% and Tier 2 at 0.5%. Total borrowings as of June 30, 2026, were INR20,000 crores, growing 19% year-on-year. The exit cost of funds was 7.7%. Liquidity stood at INR2,371 crores at quarter-end, with undrawn sanctions of INR991 crores. Management confirmed no current plans to return capital to shareholders, as it is reserved for growth, supported by the INR1,000 crores raised during the IPO.

Aadhar Housing Finance's network expanded to 628 branches across 22 states and over 550 districts. The company opened 2 new branches in Q1 FY27 and plans to open 45-50 branches annually, with most new branches reaching productivity within 9-15 months. The company is also institutionalizing a 6-layer AI architecture across origination, underwriting, surveillance, collection, and retention, building 5 proprietary reusable platforms to gain a competitive advantage.

Demand for low-income housing finance remains healthy, driven by end-users and first-time homebuyers, particularly in emerging markets. Management noted that urban demand is growing faster than expected. While geopolitical uncertainty^🌐 in West Asia is a watch item, the company's exposure to NRI-linked customers is minimal. Non-home loan growth, which saw a slight reduction in Q1 due to internal restrictions, is expected to normalize^📎 to a 70-30 home vs non-home mix by Q3 FY27.