Global brokerage firm Citi Research has initiated coverage on Aadhar Housing Finance with a ‘buy’ rating and a target price of ₹565 per share, suggesting an upside potential of 42% from its current price of ₹398. The firm is optimistic about the company’s consistent growth, which has averaged over 16% CAGR over the past 4-6 years, significantly outpacing the single-digit growth seen in the affordable housing finance market. Aadhar has carved out a niche, with a 2% market share in the low-income housing finance segment (defined as an average ticket size under ₹2.5 million). The brokerage expects Aadhar’s disbursement growth to continue driving AUM growth at a 21-22% CAGR, with additional levers including expanding beyond its core states, increasing sales offices, and further growing its share of self-employed customers. Additionally, the company is expected to improve productivity as new branches mature and manage its repayment and prepayment rates effectively. From a financial standpoint, Citi projects a 22% PAT growth from FY24 to FY27, driven by AUM growth, stable NIMs on AUM, contained credit costs, and lower operational expenses as leverage kicks in. The brokerage believes these factors will enhance Aadhar’s return on assets (RoA) and return on equity (RoE), pushing them to above 4.5% and 16.5%, respectively, over the same period. Despite a recent 23.15% correction from its all-time high of ₹516.65 per share in September, Aadhar’s stock has gained 26.3% since its IPO in May 2024. It debuted at ₹329 per share, 4.6% higher than its issue price of ₹315.