Antique starts coverage on AHFCs; Aadhar Housing, Home First top picks

Antique Stock Broking initiated coverage on five affordable housing finance companies (AHFC), citing strong structural growth prospects amid affordable valuations in the housing segment. 

 

The brokerage assigned 'Buy' ratings to the stocks, with its preference order being Aadhar Housing Finance, Home First Finance Company, India Shelter Finance Corporation, Aptus Value Housing Finance and Aavas Financiers.

 

According to Antique, the affordable housing finance segment has expanded significantly over the past decade, supported by improving affordability, rapid urbanisation, government initiatives such as Pradhan Mantri Awas Yojana subsidies and favourable demographics. 

 

These companies have built differentiated business models through a mix of self-employed and salaried borrowers, housing and non-housing loans, and in-house versus connector-led sourcing, the note said. It noted that advanced technology and strong underwriting capabilities for informal income segments have helped these lenders create a competitive moat against traditional housing finance players.

 

 

However, the sector recently faced temporary headwinds, including rising competition, stress in small-ticket MSME borrowers and administrative issues such as delays in e-Khata approvals in key states. These factors, along with global geopolitical tensions including the US-Israel-Iran conflict escalation, led to valuation corrections, with one-year forward price-to-book multiples falling 18 per cent to 48 per cent over the past 18 months, Antique said.

 

Antique expects asset quality to normalise as stress in pockets such as Tiruppur, Coimbatore and parts of Karnataka eases. It projects the listed AHFC universe to deliver 20 per cent to 25 per cent growth in medium-term assets under management. In comparison, India Shelter Finance Corporation could grow around 27 per cent due to its smaller base.

 

The brokerage also highlighted differences in interest rate transmission across lenders. Fixed-rate focused players such as India Shelter Finance Corporation have seen more stable yields during the easing rate cycle, while floating-rate lenders, including Home First Finance Company, Aavas Financiers and Aadhar Housing Finance, have passed on repo rate cuts faster to customers, leading to quicker yield adjustments.

 

Antique said fixed-rate dominated lenders benefited from yield stability amid falling rates, while floating-rate players relied on faster balance sheet transmission.

 

Asset quality across the affordable housing finance company space saw a marginal rise in stress during the first nine months of FY26, mainly due to borrower overleveraging in small-ticket microfinance and MSME segments and US tariff impact on textiles, according to Antique. It added that with an India-US trade deal and improving collection trends, credit costs are expected to decline going forward.

 

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