Aadhar Housing Finance saw its shares rally over 5% to ₹411 apiece on September 3, 2024, following a bullish coverage from Kotak Securities. The brokerage firm initiated a 'buy' recommendation on Aadhar Housing, setting a target price of ₹550 per share.
This forecast implies an impressive 41% upside from current levels, prompting investors to consider whether now is the right time to buy shares online of this promising housing finance company.
A bullish outlook backed by strong fundamentals
Kotak Securities' optimistic outlook on Aadhar Housing Finance is rooted in the company's robust growth trajectory. Analysts project that the company will achieve a compound annual growth rate (CAGR) of 21% in its loan portfolio from FY24 to FY27, aligning it more closely with mature housing finance firms rather than smaller, rapidly expanding peers in the affordable housing segment.
The brokerage firm further expects Aadhar Housing to deliver a 22% earnings per share (EPS) CAGR during the same period, supported by stable asset under management (AUM) growth, higher fee income, and consistent improvements in operating leverage. Return on equity (RoE) is anticipated to return to the high teens, particularly after a temporary reduction in the first half of FY25 due to the company's IPO.
Key risks to watch out for
While the outlook remains positive, Kotak Securities did highlight some potential risks that could impact Aadhar Housing Finance's performance. The analysts pointed out that increased competition in larger markets could lead to reduced net interest margins or slower growth. Additionally, a rise in the proportion of self-employed borrowers could pose a risk to asset quality.
However, despite these risks, Aadhar Housing Finance's strong fundamentals, including its large balance sheet, long history, and superior RoE, make it a compelling choice for investors looking to buy shares online in the housing finance sector.
A diversified player with a strong market position
Aadhar Housing Finance is one of the largest players in the affordable housing finance segment, with a well-diversified geographical presence and a broad customer base. The company offers a variety of loan products, including loans for purchasing and constructing residential properties, home improvement and extension loans, and loans for the construction and acquisition of commercial properties.
As of FY24, Aadhar Housing Finance managed assets worth ₹21,100 crore and held a 7% market share in the affordable housing segment. The company's extensive network of 487 branches and 109 sales offices, covering 20 states and union territories across India, underscores its strong market position.
Since its listing on May 15, 2024, Aadhar Housing Finance's stock has risen over 24%, reflecting growing investor confidence in the company's long-term growth prospects. For those considering investing in the stock market, this could be an opportune moment to buy shares online of Aadhar Housing Finance.
A promising investment opportunity
In light of Kotak Securities' 'buy' recommendation and the company's strong growth prospects, Aadhar Housing Finance appears to be a promising investment opportunity. With a potential 41% upside from current levels and a solid track record, the stock presents a compelling case for investors looking to buy shares online. However, it is essential to keep an eye on the potential risks outlined by analysts, particularly in the context of increased competition and asset quality concerns.
For android only