Systematix Research has initiated coverage on five affordable housing finance companies with Buy ratings, expecting 28-48% upside potential from current levels. According to reports from The Economic Times, the brokerage has assigned coverage to Home First Finance, Aptus Value Housing Finance, Aavas Financiers, Aadhar Housing Finance, and India Shelter Finance. Based on their August 28 closing prices, the brokerage sees potential upside ranging from 28% to 48%, with Aptus offering the highest return opportunity. The coverage comes as the affordable housing sector benefits from India's low mortgage penetration, rising incomes, urbanisation and growing demand from self-employed and semi-formal borrowers.
Systematix expects affordable housing financiers to benefit from India's low mortgage penetration, rising incomes, urbanisation and growing demand from self-employed and semi-formal borrowers. As reported by The Economic Times, mortgage credit accounted for just 12% of GDP in FY25, while loans below ₹35 lakh still represented about 82% of housing-loan volumes. The brokerage expects most companies under coverage to deliver loan growth in the low-to-mid-20% range and profit growth of 18-23% through FY29. However, increasing competition from banks and the transfer of loans to rival lenders remain key factors to monitor.
Systematix has assigned a Buy rating on Home First Finance with a target price of ₹1,570, implying a 31% upside from the current market price of ₹1,200. According to The Economic Times, the brokerage sees operating productivity as Home First's key advantage, with its centralised underwriting, common sales and collection systems, technology-led processes and relatively light branch network allowing growth without proportionate cost increases. Systematix expects assets under management to grow at a 24% CAGR between FY26 and FY29, while earnings per share could increase at a 21% CAGR, with average return on assets and return on equity estimated at 3.8% and 15.3% respectively. Despite increasing competition, Systematix believes Home First's customer-acquisition capabilities and assessed-income underwriting expertise should support healthy growth.
Systematix has a target price of ₹380 for Aptus, implying a 48% upside from the current market price of ₹256. As reported by The Economic Times, Aptus has the strongest return profile in the coverage universe, supported by its exposure to higher-yielding housing, loan-against-property and small-business loans. Non-housing products generate yields of about 17-20%, compared with 14-14.5% for housing loans. This diversified portfolio is expected to support an average net interest margin of about 10%, return on assets of 7.5% and return on equity of 20.5%. Systematix forecasts AUM and EPS CAGRs of 22% and 18% respectively through FY29, with growth expected to recover as Aptus expands into western India and deepens its presence in southern markets.
According to The Economic Times, Aavas Financiers has a target price of ₹1,700, implying a 32% upside from ₹1,289, with forecasted AUM and EPS CAGRs of 19% and 16% respectively through FY29. Aadhar Housing Finance has a target price of ₹600, implying a 28% upside from ₹470, with expected AUM growth at 20% CAGR and EPS at 21% CAGR through FY29. India Shelter Finance offers the strongest structural growth profile with a target price of ₹880, implying a 35% upside from ₹650, forecasting AUM and EPS CAGRs of 26% and 23% respectively through FY29. The company's focus on smaller loans with 73% of loans below ₹15 lakh gives it access to underserved markets and supports a portfolio yield of about 15%.
