Aadhar Housing Finance Shares Recommended for Purchase by Major Brokerages with Potential Gains of 27.6%

Five major brokerages, including ICICI Securities and Kotak Institutional Equities, have recommended buying Aadhar Housing Finance shares. They see potential gains of up to 27.6% after the company's impressive Q2 and H1 FY26 results. Aadhar Housing Finance is favoured by these brokerages due to its strong asset quality and disciplined credit management.

Aadhar Housing Finance has shown a significant improvement in asset quality, with Stage 2 assets decreasing to 3.5% from 3.7% quarter-on-quarter. The reduction in 30+ days past due (DPD) loans highlights effective credit management. Credit costs have also decreased significantly to 19 basis points from 41 basis points, thanks to a robust collection network of approximately 1,500 personnel.

The company's assets under management (AUM) grew by 21% year-on-year, reaching Rs 27,554 crore by the end of September 2025. This growth is supported by steady disbursements and expansion into new markets. The loan portfolio remains well-diversified, with no single state contributing more than 15% of AUM, and minimal exposure to stress-prone regions like Tirupur and Coimbatore.

Profit after tax increased by 17% year-on-year to Rs. 266 crore in Q2 FY26, compared to Rs. 228 crore in Q2 FY25. For H1 FY26, profit after tax rose by 18% year-on-year to Rs. 504 crore from Rs. 428 crore in H1 FY25. The total number of loan accounts exceeded 3,15,000 as of September 2025.

Brokerages have set target prices for Aadhar Housing Finance shares based on the company's strong financial performance. ICICI Securities and Kotak Securities both set a target price of Rs 625, while Mirae Asset set it at Rs 605. Investec also set a target price of Rs 625, and DAM Capital Advisors set it at Rs 590.

Aadhar's innovative split-branch model between urban and emerging markets supports AUM growth above 20%, maintaining spreads over 5.5%. The emerging market portfolio yields higher returns of 14.5-16%, contributing to margin stability and stronger earnings.

Future Prospects

The company expects disbursement momentum to increase in the second half of FY26 due to government schemes like PMAY 2.0 and GST benefits. Margins have improved as borrowing costs declined by 10-20 basis points, leading to spread expansion. Further reductions in funding costs are anticipated in H2FY26.

Aadhar's return ratios remain robust, with Return on Assets (RoA) above 4% and Return on Equity (RoE) around 16%. This indicates efficient profitability and cost control despite a higher base. Management anticipates sustained AUM growth of 20-22% CAGR over FY25-FY28 through geographic diversification and a focus on salaried borrowers.

The company's asset quality resilience is supported by high collection efficiency of 99% and lower stress levels compared to peers in the affordable housing finance segment.

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