Aptus Value Housing Finance Expects 29% Growth In Loans In Three Years

Aptus Value Housing Finance India Ltd. expects a 20–22% growth in lending in the near term and around 29% year-on-year growth over the next two to three years.

The recent repo rate reduction by the Reserve Bank of India and an upgraded credit rating by CARE Ratings will aid growth as the retail-focused housing finance company is expected to borrow funds at more affordable terms, according to Managing Director P Balaji.

"We have been projecting it will be around 20 to 22% growth every year and the year-on-year growth should be around 28–29% for the next two to three years," Balaji said in a conversation with NDTV Profit on Wednesday. "Considering the huge runway for growth and the market availability, we are confident of doing that."

His comments came after the company received an upgraded credit rating from CARE Ratings last week, which raised Aptus' rating to 'AA; Stable' from 'AA-; Positive'. The upgrade reflects stronger creditworthiness and financial stability for the company and is expected to support its growth plans.

With the improved ratings, Aptus Value Housing Finance India is expected to negotiate better borrowing terms.

"One is the diversification of borrowings, as mandated by the RBI, which means we'll be in a better position to negotiate improved borrowing rates and amounts with insurance companies and mutual funds. That is one area where the upgrade will help us.

"The next is, of course, the reduction in the cost of borrowing due to this upgrade. There will definitely be at least a 0.25% reduction in the cost of incremental borrowings," he said.

Moreover, the RBI's repo-rate cut is not likely to impact Aptus' cost of funds, according to Balaji.

"If you look at our total borrowings, almost 57% is linked to variable rates and 43% is linked to fixed rates, which means, for that 43%, there will be no impact on the cost of funds. For the 57% linked to variable rates, if you break that down, 30% is linked to market-related rates," he said.

"So, a 1% reduction will impact that 30% immediately. As of today, we've already seen a 0.6% reduction, and the remaining 0.4% should come in anytime," he explained.

Balaji added that the balance 27% borrowing is linked to the MCLR and it depends on the banks to pass on that benefit. In his view, that might take at least three to six months.

"On incremental borrowings, we’re already seeing a 0.4% to 0.5% reduction in borrowing costs. We are now negotiating rates around 8% to 8.25%, which is a significant benefit," Balaji said.

"If you look at our loan book, 20% is linked to variable rates, so we may need to pass on some of the benefits in this quarter. But for the remaining 80%, which is a fixed rate, there's no immediate pressure to pass on the benefit," he said.

Overall, Balaji expressed strong confidence in the growth outlook for affordable housing finance, highlighting India’s low mortgage penetration compared to global standards.