Aadhar Housing Finance share price jumps to record high. Experts remain bullish on the stock; here’s what they say #CashNews.co

Aadhar Housing Finance share price surged over 6 per cent to hit its fresh all-time high of ₹493.10 in intraday trade on the BSE on Monday, September 23. Shares of Aadhar Housing Finance opened at ₹478.25 against its previous close of ₹464.05 and jumped as much as 6.3 per cent to hit its record high level. Around 12:30 pm, the stock traded 4.28 per cent higher at ₹483.90 apiece. Equity benchmark Sensex was 0.15 per cent up at 84,670 at that time.

The stock has seen healthy gains over the last six months, and experts believe it has more steam left. Aadhar Housing Finance share price hit its 52-week low of ₹293.35 on May 15 this year but has been rising since. At the current high of ₹493.10, the stock has gained 68 per cent from its one-year low level.

More steam left?

Experts are positive about the stock for the long term as they highlight the company’s bright growth prospects.

Expressing its bullish view on India’s largest listed affordable housing financier, brokerage firm JM Financial has initiated coverage on the stock with a buy call and a target price of ₹600, implying an upside potential of 29 per cent from the stock’s Friday (September 20) close of ₹464.05 on the BSE.

“Aadhar has the longest track record in the affordable housing space with total asset under management (AUM) of ₹21,700 crore. Post-acquisition by Blackstone L.P., the company has made significant progress in corporate governance, growth, efficiency and profitability,” JM Financial observed.

The brokerage firm pointed out that Aadhar’s diversified presence across 21 states should mean its healthy growth.

“The company’s graded branch expansion strategy allows it to set footprints in tier-4/5 areas at cheaper costs while use of Aadhar Mitra (lead generation channel) and smart use of tech to handle day-to-day operations significantly contribute to operational efficiencies,” JM Financial said.

Despite the start of the potential interest rate cut cycle in India, the brokerage firm expects Aadhar’s margins to remain stable and credit costs to remain benign due to its well-matched and positive ALM (asset liability management) mix as it has 78 per cent floating liabilities versus 80 per cent floating assets.

“We expect Aadhar to deliver an EPS (earning per share) CAGR of 26 per cent over FY24- 26E led by: (i) a 23 per cent CAGR AUM growth, (ii) steady margins, (iii) operating leverage, and (iv) steady credit costs. This entails RoAs (return on assets) of 4.3 per cent and 4.5 per cent for FY25E and FY26E, respectively. Due to an IPO infusion of ₹1000 crore, RoEs (return on equities) will continue to be robust at 17 per cent (versus 18.4 per cent in FY24),” said JM Financial.

Earlier in September, brokerage firm Kotak Institutional Equities initiated coverage on the stock with a ‘buy’ rating and set a target price of ₹550 apiece.

As Mint reported earlier, Kotak noted that Aadhar stands out among its affordable housing finance peers due to its larger balance sheet, longer operational history, and superior RoE. The brokerage firm also pointed out that Aadhar’s projected loan growth of 21 per cent CAGR during FY2024-27 is more in line with mature housing finance companies than smaller, faster-growing affordable housing finance companies.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.