Aadhar Housing Finance Ltd. (AHFL) is a HFC focused on the low income housing segment (ticket size less than Rs. 1.5 million) in India and it had the highest AUM and net worth among analyzed peers in FY2021, FY2022, FY2023 and nine months ended December 31, 2022 and December 31, 2023. In addition, according to the peer set analyzed by CRISIL, AHFL had the highest number of live accounts in FY2023 (Source: CRISIL Report). In addition, it has a presence in 20 states and union territories, which is the highest among the peers analyzed by CRISIL as of March 31, 2023 (Source: CRISIL Report).

AHFL is a retail-focused HFC focused on the low income housing segment, serving economically weaker and low-to-middle income customers, who require small ticket mortgage loans. The average ticket size of its loans was ₹0.9million and ₹1.0 million with an average loan-to-value of 57.7% and 58.3%, as of December 31, 2022 and December 31, 2023, respectively. It offers a range of mortgage-related loan products, including loans for residential property purchase and construction; home improvement and extension loans; and loans for commercial property construction and acquisition. Company’s financial performance has remained consistent and resilient through various external events in the Indian economy.

It has made social objectives one of the core objectives of its business model. It operates a financially inclusive, customer centric lending business and believes that its business model contributes significantly to the economic uplift of its target customers by contributing to an improvement in their standard of living. In addition to customer-facing social objectives, it has also implemented social objectives in aspects of its business. AHFL’s presence in urban and semi-urban locations across India provides a source of employment in these locations.

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• The company is focused on the low income housing segment (ticket size less than ₹1.5 million) in India with the highest AUM and net worth among its analyzed peers in Fiscal 2021, Fiscal 2022, Fiscal 2023 and nine months ended December 31, 2022 and December 31, 2023.
• The company has well-established business strategy that remains resilient during business cycles.
• The company has vast branch and sales office network, regional penetration, and sales channels that greatly aid in loan sourcing and servicing.
• It has implemented a robust, comprehensive systems and processes for underwriting, collections and monitoring asset quality.
• The company has access to diversify and cost-effective long-term financing with a disciplined approach to asset liability and liquidity management.
• Social objectives are one of the core components of its business model.
• The company has skilled, professionally trained, and cycle-tested management team with solid corporate governance.

• To meet future capital requirements towards onward lending; and
• General corporate purposes.

In the low-income housing market, the company is a leader in its field. For the periods under review, it has consistently increased both its top and bottom lines. It is the most popular HFC and is present throughout India. The issue seems fairly priced and makes sense as long-term scrip of portfolio for investors in this class, based on FY24 annualized earnings. Investors may subscribe for the medium to long term rewards.