Affordable housing financier Aadhar Housing Finance Ltd (AHFL) has set its sights on doubling its assets under management (AUM) to ₹50,000 crore in four years on the back of a 21-22 per cent yearly growth in loan disbursements and addition of 60-70 branches each year.
In an interaction with businessline, Rishi Anand, MD & CEO of Blackstone-backed AHFL since January 2023, said it’s time credit rating agencies consider upgrading his company’s “AA” rating to “AA+” as it is ticking all the right boxes, right from governance to listing to growth in loan book.
What is your assessment of the housing finance industry?
Post-Covid, the entire housing industry saw a spurt in demand. I think, people emotionally realised the importance of having a house of their own. If something happens (to the breadwinner), what will happen to the family? That led to a surge in demand. Then, we also saw a little surge in the cost of construction. Material cost, labour cost, everything went up. So, all this, somewhere, I think, gave a leg up to our industry. On average, in the last few years, we (AHFL) have been growing at the rate of about 20-21 per cent in AUM… about 19-20 per cent growth in profits.
What is your take on the various Government schemes promoting home ownership?
In the low income housing (the segment we cater to), a lot of consumers, in the business as usual momentum, were getting left out. So, the government pre-budget (January 2025) launched a fund called Credit Risk Guarantee Fund Trust for Low Income Housing(CRGFTLIH) to cater to the people who are getting left out. So, that is a good move. Then the Pradhan Mantri Awas Yojana (PMAY) initiative for achieving “Housing for All” is there. The Special Window for Affordable and Mid-Income Housing (SWAMIH) 2.0 fund of ₹15,000 crores has been announced for completion of stalled housing projects. Somebody will have to buy houses in these projects. So, the demand will further increase. Hence, at least 0 to 3 years from now, we see a good demand trajectory building up further.
What is your guidance for growth in the next three years?
In terms of guidance, our AUM should grow at about 22-23 per cent. Disbursement will grow at about 21-22 per cent and profit after tax at about 20 per cent. We are at about ₹25,500 crores AUM approximately. And with the percentages that we have in mind, we should double our AUM in four years.
So, will you require more capital to support the targetted AUM growth?
For the next four-year growth journey, we will not need capital. Our leverage is at about 3 times. So, we have room (for borrowing). Our capital adequacy ratio (as at December-end 2024) was at about 46 per cent. We raised about ₹1,000 crores fresh capital via the IPO last May. So, capital requirement is not there
.On the liability side, we will keep needing funds. There are multiple avenues for raising funds. Right now, broadly, our borrowings are at about ₹15,000 crores. We have, strategically brought down our bank exposure over the last four years or so from 62 per cent to about 51 per cent. The balance funds come from the National Housing Bank (25 per cent: refinance) and Bonds (24 per cent).
Is there any particular reason you reduced your dependence on Bank funding?
It’s just that we didn’t want to park all our eggs in one basket. And, if sometimes, the banking structure stands up and says, for this year our NBFC exposure limit is over, then we are stuck. So, we have diversified our borrowings.
Have you sought an upgrade in your ratings?
Today, we have a “AA” rating from ICRA, CARE Ratings, India Ratings and Brickworks. We have been rated “AA” (issuers with this rating are considered to offer high degree of safety regarding timely servicing of financial obligations. Such issuers carry very low credit risk) by CARE and ICRA for the last five years. It’s time that we get a rating upgrade. Are we engaging? Yes, we are engaging with the rating agencies….We are ticking all the right boxes, right from governance to listing to the book, etc. Everything is there.
The moment we get a rating upgrade, our debt issuances will become more attractive for investors such as insurance companies and pension funds to invest in. We are looking at raising resources via ECBs (external commercial borrowings) this year.
What are your physical expansion plans?
We have been expanding our distribution into the nooks and corners of the country. We are already at 600 branches spread across 21 States/ Union territories. And we are expanding further, deeper. Now, we are venturing into small talukas, small district centres, because the real demand is there. If I look at our numbers today, the yield growth is actually coming from tier 3, tier 4 and tier 5 centres. The customers there are the actual end users. The loan ticket sizes are small — only ₹5 lakh. Such customers typically have ancestral land and they would want to construct two rooms.
So, typically, self-construction loan demand will be there in tier 4, tier 5 locations. It gives us good spread and good yield because we address the problem of dearth of capital availability in such locations. For them, availability of capital is more important than at what cost it is coming or how fast or how late it is coming. So, we have expanded and reached out to these locations. As we go ahead, we will add about 60 to 70 branches year on year. So, that will give us the distribution network. We have to set up shop as our consumer is not digital savvy.
