Aadhar Housing Finance 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 their loans is Rs 90 lakhs with an average loan-to-value of 57.6%. They had the highest AUM and net worth among their peers in six months ended Sept 30, 2023. In addition, they had the highest number of live accounts in FY2023. They have a presence in 20 states and union territories, which is the highest among peers.
They offer 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. They have made social objectives one of the core objectives of their business model and operate a financially inclusive, customer centric lending business.
Strengths And Risks
+ Segment Focus : Aadhar Housing Finance is an HFC focused on the low-income housing segment (ticket size less than Rs 15 lakhs) in India and highest AUM and net worth among peers. Due to their scale and diversified reach, they are well-positioned to meet the specific needs of target customers.
across geographies, in urban and semi-urban areas.
+ Seasoned Business Model: Company's financial performance has remained consistent and resilient through various external events in the Indian economy. During these periods, the economy and the banking and finance industry in India were adversely impacted by various events such as demonetization and the and roll out of GST; defaults involving large NBFCs and the various waves of the COVID-19 pandemic.
+ Extensive Network: Aadhar Housing has a pan-India branch and sales office network. A comprehensive on-the-ground presence is essential for success and growth in the low income housing finance segment.
+ Robust Systems : Aadhar Housing has implemented a robust and comprehensive credit assessment, risk management and collections framework to identify, monitor, and manage risks inherent in our operations. These include
capital, profitability, asset quality, credit, operational, liquidity and compliance risk.
- Legal Proceedings: Company is involved, from time to time, in legal proceedings that are incidental to their operations and these involve proceedings filed by and against them. These include among others, criminal and civil proceedings, tax proceedings, and criminal complaints.
- Interest Rate Volatility : Company's operations are particularly vulnerable to volatility and mismatches in interest rates. Their net interest income and profitability directly depend on the difference between the average interest rate at which they lend and the average interest rate at which they borrow.
- Stringent Compliance: Company has to comply with stricter regulations and guidelines issued by regulatory authorities in India, including the NHB and RBI, which may increase compliance costs, divert the attention of management and subject them to penalties.
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