Will Lower Funding Costs Propel Aadhar Housing’s Growth Momentum in FY26?

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Citi maintains a ‘Buy’ on Aadhar Housing Finance with target ₹650, citing improving spreads, lower funding costs, and strong AUM growth guidance for H2 FY26.

Will Lower Funding Costs Propel Aadhar Housing’s Growth Momentum in FY26?

About Aadhar Housing Finance

Aadhar Housing Finance Ltd is one of India’s largest affordable housing finance companies catering to the low-income and economically weaker segments. The firm benefits from strong distribution reach, digital underwriting, and access to diversified funding channels.

Q2 FY26 results underline improving spreads due to lower cost of funds and stable credit quality, positioning Aadhar Housing for sustained profitability.

Financial Highlights (Q2 FY26)

MetricQ2 FY26YoYQoQ
AUM₹20,580 Cr+21%+5%
NII₹620 Cr+17%+6%
NIM5.2%+40 bpsStable
PAT₹280 Cr+18%+4%

AUM ₹20,580 Cr — driven by disbursement growth of 18% YoY.

NIM 5.2% — aided by declining cost of funds and better yield mix.

PAT ₹280 Cr — reflects improving operating leverage and stable credit cost.

Investors tracking housing finance trends may refer to Nifty Options Signal.

Peer Comparison

CompanyAUM GrowthNIM
Aadhar Housing21%5.2%
Home First20%5.0%
Aavas Financiers17%5.1%

Strengths & Weaknesses

Strengths

  • ✅ Large affordable housing portfolio with diversified base.
  • ✅ Declining funding cost improves spreads.

Weaknesses

  • ⚠️ Concentration in lower-income segment.
  • ⚠️ Dependence on wholesale funding.

Opportunities & Threats

  • đź’ˇ Government focus on housing for all to drive loan demand.
  • đź’ˇ Lower borrowing rates sustain profitability.
  • 📉 Funding market volatility risk.
  • 📉 Rising competition from private NBFCs.

Valuation & Investment View

  • Short-term: Positive momentum on spread recovery.
  • Medium-term: Strong AUM and disbursement growth visibility.
  • Long-term: Sustainable ROA improvement through cost efficiency.

Track housing finance sector cues with BankNifty Options Signal.

Investor Takeaway

Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, views Aadhar Housing as a steady compounder in the affordable housing space with improving spreads and AUM visibility. Read more insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.

SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions.

Aadhar Housing Finance Q2 FY26, Citi Report, Housing Finance Stocks, Indian-Share-Tips.com

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