About Aadhar Housing Finance Limited

Aadhar Housing Finance Limited, a HFC focused on the low income housing segment (ticket size less than ₹1.5 million) in India. The company serves economically weaker and low-to-middle income customers, who require small ticket mortgage loans. The average ticket size of our loans was ₹0.9 million and ₹1.0 million.

With presence in 20 states and union territories and having an extensive network of 487 branches including 109 sales offices, as of Dec’23 the company has highest AUM and net worth.

The company secures financing from a variety of sources including term loans and cash credit/ working capital facilities, proceeds from loans assigned, proceeds from the issuance of NCDs, refinancing from the NHB and subordinated debt borrowings from banks, mutual funds, insurance companies and other domestic, development financial institutions to meet capital requirements.

As per household finance committee report issued by the RBI in 2017, the average Indian household holds 77% of its total asset in real estate which includes residential buildings, buildings used for farm and non-farm activities, constructions such as recreational facilities, and rural and urban land. Amongst the top states with high shortage of homes, some states such as Uttar Pradesh, Bihar, West Bengal, Rajasthan and Madhya Pradesh have a lower per capita income, as compared to the national average. This shows that there is significant headroom for growth in terms of increasing per capita income and reducing the housing shortage in India.

The overall size of the housing finance market focusing on low income housing loans in India was around ₹ 4.4 trillion as of December 2023, constituting for around 14% of the overall housing finance market, as per CIBIL data. With outstanding loans of ₹ 1.7 trillion as of December 2023. HFCs accounted for 29% of the market.

Rise of hybrid work model and working from home led to an increase in demand for bigger residential homes. As a result, the sale in affordable housing took a beating whereas high-end and midsegment housing gained the maximum in the last couple of years. The industry is expected to see a moderate growth with a CAGR of 8-10% between Fiscals 2023 and 2026.

Risk associated to the issue:

• Dependence on potential borrowers and third-party service providers: The company depends on the information furnished by potential borrowers, and analysis of the information by independent valuers and advocates in deciding whether to extend credit or enter into other transactions with potential borrowers.
• Exposed to volatility in interest rates: Net interest income and profitability directly depend on the difference between the average interest rate at which the company lend and the average interest rate at which the company borrows. Any change in this will severely affect the business.
• Comply with regulations and guidelines of NHB and RBI: Business and financial performance could be adversely affected by changes in the laws, rules, regulations or directions applicable to them or the housing finance business.
• The company depends on third-party selling agents for referral of 66.5% of new customers for the nine months ended December 31, 2023.