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Branch Vintage Flywheel to Sustain ~22% AUM Growth

APTUS scaled up its AUM by 20% every year since FY18, including COVID-19 period and, we believe, the pace of growth is repeatable. It serves selfemployed, first-time home buyers, a segment banks continue to vacate. Balancetransfer leakage of ~2.5% keeps run-off low and disbursements accretive to AUM. Rising ticket sizes of INR 50k–100k a year add further momentum. APTUS customer base is served by an in-house branch network. Productivity rises sharply with vintage, as mature branches carry ~13x a new branch’s AUM. We forecast AUM of INR 195.4 Bn by FY28E, at 22.1% CAGR

In-house, Tech-led Model Keeps Opex and Credit Cost Low through Cycles

APTUS earns the highest yield among listed AHFCs yet keeps cost among the lowest. This combination is driven by an in-house, technology-led operating model. Technology spend rose ~10x since FY21, yet opex-to-AUM stood at 2.6– 2.8%. The same platform supports a disciplined credit process, from sourcing to sanction. After checks on 50+ data points, only ~65% of branch leads convert into disbursement. Dues are collected entirely in-house, from the first EMI to SARFAESI. With ~40% LTV, most delinquencies result in recovery rather than loss. As a result, credit cost stayed at 0.3–0.5% over FY23–26. We project opex-to-AUM of ~2.7% and credit cost of ~0.6% over FY27E–28E.

Structurally Superior RoA Supports Durable ~20% RoE at Conservative Leverage

APTUS’ returns are built on asset-side profitability rather than balance-sheet leverage. Its reported yield stood at 16.9–17.4% through a full rate cycle. In the last four years, floating-rate borrowing doubled to 43%, while Aptus' rating has upgraded to AA. We expect spreads to stabilise at ~8.8% and NIM to recover to ~11.0% by FY28E. Supported by a lean opex and contained credit cost, we project RoA to sustain at ~7.8%. This underpins our RoE estimate of 20.4% / 20.7% for FY27E / FY28E, respectively. Notably, APTUS earns the highest RoE among listed AHFCs at the lowest leverage. We anticipate a modest rise in leverage to 2.7x by FY29E.

Valuation and View

We initiate coverage on APTUS with a ‘BUY’ recommendation. We value the company at 2.5x FY28E ABV (based on peer-group benchmarking), resulting in target price of INR 330.0 per share, with an upside potential of 50.7%. APTUS leads both affordable and prime housing financiers on profitability, with estimated RoA of 7.8% and RoE of 20.4% / 20.7% for FY27E / FY28E. It delivered 20%+ RoE in FY26 despite a ~INR 1.0 Mn ticket size and a branch-heavy model. Its 9.1% spread, the widest among peers, reflects strong underwriting and cost discipline. Net NPA of 1.3% is among the highest in the peer set, but we expect it to stabilise on improving collections and ~40% LTV. We validated our P/ABV derived TP with residual income approach TP of INR 320.

Key Risks

Slower-than-expected branch ramp-up, higher delinquencies in the SBL and Karnataka books, yield pressure from rising competition and lower assignment income could weigh on earnings and valuation.

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