AADHARHFC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 3.6

📊 Core Financials

• Revenue & Profitability: PAT improved from 237 Cr. to 266 Cr. (Qtr Var +17%), showing steady growth.
• Margins: ROE at 16.9% is strong, while ROCE at 11.4% indicates moderate efficiency.
• Debt: Debt-to-equity ratio of 2.56 highlights high leverage, typical of housing finance companies.
• Cash Flow: Dividend yield is 0.00%, with focus on reinvestment over payouts.

💹 Valuation Indicators

• P/E Ratio: 21.4 vs Industry PE of 18.0 — slightly overvalued.
• P/B Ratio: Current Price 487 ₹ vs Book Value 159 ₹ → ~3.06x, moderately expensive.
• PEG Ratio: 0.79, suggesting valuation is aligned with earnings growth.
• Intrinsic Value: Current price reflects fair valuation, with limited margin of safety.

🏢 Business Model & Competitive Advantage

• Aadhar Housing Finance focuses on affordable housing loans, catering to low and middle-income segments.
• Competitive advantage lies in niche positioning, wide reach, and government-backed housing demand.
• High leverage is a structural aspect of the business model, but profitability remains consistent.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive near 440–460 ₹ range, closer to DMA 200 and support levels.
• Long-Term Holding: Suitable for investors seeking exposure to affordable housing finance growth, but leverage risk must be monitored.

✅ Positive

• Strong ROE (16.9%) and consistent PAT growth (+17%).
• PEG ratio (0.79) indicates valuation aligned with growth.
• FII holdings increased (+0.53%), showing foreign investor confidence.

⚠️ Limitation

• High debt-to-equity ratio (2.56) reflects leveraged balance sheet.
• P/E (21.4) and P/B (~3.06x) indicate premium valuation compared to peers.
• Dividend yield is 0.00%, limiting income appeal.

📉 Company Negative News

• DII holding reduced by -0.18%, showing slight decline in domestic institutional confidence.
• High leverage increases risk in volatile interest rate environments.

📈 Company Positive News

• FII holdings increased (+0.53%).
• PAT growth highlights operational strength.
• Stock trading near DMA 200, showing technical support.

🌐 Industry

• Industry PE at 18.0, slightly lower than Aadhar HFC’s valuation.
• Housing finance sector benefits from government initiatives and rising demand for affordable housing.

🔎 Conclusion

• Aadhar Housing Finance is fundamentally stable with strong ROE and consistent profitability.
• Valuations are slightly stretched compared to industry peers, with high leverage as a key risk.
• Best suited for accumulation near 440–460 ₹ levels.
• Long-term investors can hold for exposure to affordable housing growth, but should monitor debt levels and interest rate trends.