Affordable housing financiers attractively valued after correction

The affordable housing financiers (AHF) segment is a long-term structural story, given low mortgage penetration and favourable policy.

- DEVANGSHU DATTA

The industry is looking at stricter underwriting and a focus on branch productivity.The Q2FY26 was muted and it led to price corrections. Demand is improving but concentrated in larger-ticket loans. Around 80 percent are in the ₹10 lakh-₹1 crore ticket size with faster growth in higher ticket sizes.

Interest rates have declined meaningfully. But AHFs faced headwinds in Q2, marked by slow disbursements, elevated delinquencies and resultant increased credit costs. AHFs may also have scalability challenges and there’s rising competition.

All AHFs reported moderation in asset under management or AUM growth by 600-700 basis points (bps) in Q2FY26 and HiFY26 versus respective prior growth rates across the last three financial years.

In Q2FY26 Home First’s AUM grew 26 percent year-on-year (Yo-Y) vs. 33 per cent annual growth or CAGR in FY23-25. Similarly, Aptus reported 22 per cent Yo-Y AUM growth vs 27 per cent CAGR in FY23-25. Aavas reported 16 per cent Yo-Y AUM growth vs 20 percent CAGR reported in FY23-25. The moderation is partly due to base effect but lower branch productivity and cautious underwriting plays its part.