This article first appeared on GuruFocus .
Release Date: November 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Aadhar Housing Finance Ltd ( NSE:AADHARHFC ) reported a 21% year-over-year growth in Assets Under Management (AUM), reaching 27,554 crores as of September 30, 2025.
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The company's disbursements increased by 16% year-over-year, indicating consistent lending momentum.
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Asset quality remains strong with a gross NPA of 1.42% and collection efficiency above 99%.
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The company expanded its branch network by adding 20 new branches, bringing the total to 611 branches across 22 states.
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Digital transformation initiatives, including AI and machine learning, have improved operational efficiency and customer experience.
Negative Points
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The company's stage 3 assets saw a slight increase from 1.34% to 1.42%, indicating some movement from stage 2 to stage 3.
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There was a sequential decline in disbursement growth, which was only 4% in Q2 compared to the previous quarter.
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The cost to income ratio, although improved, still stands at 36.1%, indicating room for further efficiency improvements.
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The company faces competition from larger players who may undercut prices to gain market share.
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There are concerns about potential stress in specific regions like East India and Kerala due to a lack of legal support systems.
Q & A Highlights
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Warning! GuruFocus has detected 6 Warning Signs with NSE:AADHARHFC.
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Q: What is driving Aadhar Housing Finance's better asset quality performance compared to the industry, and can you share your exposure in stressed markets? A: (CFO) Our stable credit cost and behavior are due to our diversified presence across India, with no single state contributing more than 15% of our portfolio. This diversification helps mitigate stress in specific markets. Our stage 2 assets have improved by 20 basis points, and we have not seen any significant new stress in specific states. Our exposure in stressed markets like Tirupur, Surat, and Coimbatore is minimal, and we've seen improvements in these areas sequentially.
Q: Can you explain the sequential decline in disbursements despite a 16% year-on-year growth? Are you confident about achieving 18-20% disbursement growth for FY26? A: (CEO) The sequential decline is due to a regulatory change last year that shifted disbursements from Q1 to Q2, creating a distorted view. We are confident in achieving our guidance, as H1 typically accounts for 40% of annual disbursements, and we've already achieved 42% of our target. The market dynamics and our strategies are aligned to meet our growth targets.
Q: How do you plan to manage spreads and cost of funds, and what is your guidance for spreads in the coming quarters? A: (CFO) We anticipate a further 10 basis point improvement in our cost of funds by the end of the financial year. We have not passed on any rate hikes to customers yet, but we expect benefits from MCLR reductions. Our current spreads are around 5.93%, and we aim to maintain them at approximately 5.8% by year-end.
Q: What is the status of recoveries from your project finance portfolio, and is there more to be recovered? A: (CFO) We recovered approximately 8 crores from our old project finance portfolio, which was fully written off. We have a remaining pool of 25 crores, which we expect to recover over the next 2-3 years, depending on the circumstances.
Q: Can you provide insights into your branch expansion strategy and any specific states you are targeting? A: (CEO) We plan to add 50-55 branches annually, with 15 in urban areas and 35 in emerging markets. We are not targeting specific states but are focusing on high-potential areas based on market potential and delinquency data. Our expansion will primarily be in the top 10 states, including Maharashtra, Tamil Nadu, Andhra Pradesh, and others.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
