Aadhar Housing Finance: Building on a Strong Foundation in H1 FY26

Aadhar Housing Finance Limited has reported a robust performance for the second quarter and first half of the financial year 2026, showcasing significant growth in its core operations and a disciplined approach to asset quality. The company, a prominent player in India's low-income housing finance segment, continues to leverage its extensive network and digital capabilities to drive inclusive growth. The consolidated financial results highlight a period of strategic execution and operational efficiency, reinforcing its market leadership.

For H1 FY26, the company's Assets Under Management (AUM) surged by 21% year-on-year, reaching INR 27,553.7 crore. This growth was complemented by a healthy 18% increase in Profit After Tax (PAT), which stood at INR 503.75 crore. Disbursements also maintained a consistent momentum, growing by 16% year-on-year to INR 4,089 crore. Despite a slight sequential moderation in Q2 disbursements, attributed to a high base from a prior regulatory circular and extended monsoons impacting self-construction loans, the overall half-year performance remains strong. The company's net interest margin (NIM) also saw an 18% increase year-on-year, reflecting effective management of finance costs.

Strategic Pillars and Operational Excellence

Aadhar Housing Finance's success is deeply rooted in its strategic focus on the low-income housing segment, particularly Economically Weaker Sections (EWS) and Low-Income Groups (LIG). The company's portfolio is 100% secured retail, with home loans constituting 73% of the AUM and loans against property making up the remaining 27%. The average ticket size of INR 10.5 lakh and a loan-to-value ratio of 60% underscore a prudent lending approach. The salaried segment contributes 55% to the book, aligning with the company's focus on stable income profiles.

Digital transformation is a key enabler. The 'Digital-First Operating Model', powered by a TCS-Enabled Core System, has streamlined processes across the entire loan lifecycle. This has resulted in a door-to-login time of 25-35 minutes, 100% paperless digital processing, and a 97% NACH conversion rate for collections. The company also leverages data science and AI/ML for enhanced credit risk underwriting, predictive analytics for collections, and geo-spatial analytics for strategic branch expansion. This technological edge not only improves efficiency but also strengthens risk management.

Asset Quality and Funding Profile

Asset quality remains a strong point for Aadhar Housing Finance. Gross NPAs were well-contained at 1.42%, and significantly, Stage-II assets improved by approximately 20 basis points year-on-year in H1 FY26. The collection efficiency stood at a robust 98.96%. The company's diversified portfolio, with no single state accounting for more than 15% of its AUM, further mitigates regional risks. Even in micro-markets that have shown stress for other players, Aadhar has observed a sequential dip in 1+ DPD, indicating effective risk containment.

On the funding front, the company maintains a positive Asset Liability Management (ALM) position across all buckets. Its borrowing mix is diversified, with 50% from banks, 21% from NHB, 22% from NCDs, and 7% from ECB and other sources. A recent rating upgrade to AA+/Stable from CARE reflects its strong financial health and provides access to longer-duration and potentially lower-cost borrowings, further strengthening its funding profile.

Outlook and Social Commitment

Management expresses a positive outlook for the coming quarters, anticipating AUM growth of 20-22% and PAT growth of 18-20% for the full financial year. The company aims to further reduce its cost-to-income ratio by 40 basis points. The affordable housing segment is poised for significant growth, driven by government support and recent GST reforms that reduce construction costs and improve affordability. Aadhar Housing Finance is well-positioned to capitalize on these tailwinds, supported by its strong fundamentals, expanding distribution networks, and technology-led operating efficiency.

Beyond financial metrics, Aadhar Housing Finance integrates social objectives into its core business. Initiatives like Aadhar Kaushal (skill development), Aadhar Aaangan (nutrition and education), and Aayushmaan Aadhar (healthcare support) underscore its commitment to socially inclusive growth, aligning its business model with broader societal development goals. This blend of financial prudence and social responsibility positions Aadhar Housing Finance for sustained, impactful growth.