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Yes Securities Report
Aptus Value Housing Finance India Ltd. offers a favorable long-term risk-reward at current valuation (2.7 times price-to-adjusted-book value and 16 times price-to-earning on FY25E), wherein structural business model positives seem underemphasized.
While concerns over stock supply in the longer run are tenable, the apprehensions around management transition and business scalability appear stretched.
We view the appointment of Mr. Balaji as Managing Director (erstwhile Executive Director and Chief Financial Officer) as a non-disruptive development with growth/quality execution fairly verticalised and institutionalised at Aptus Value, and the likelihood of Mr. Anandan guiding strategy even after current term (ending in December 2024) by being a non-executive Chairman.
Aptus Value has demonstrated regional diversification/scalability with comparable asset quality across disparate Southern markets. While existing markets can comfortably support 25-30% growth in coming years, the contiguous and calibrated entry/expansion in new states would aid long run prospects.
Structurally, portfolio spread and opex metric should remain in a narrow band underpinned by benefits from niche positioning, scale, tech investments and credit rating.
Aptus Value's strong customer and property underwriting, and focused collection mechanism gets reflected in low credit cost and gross non-performing loans, and negligible actual loan write-offs.
We estimate 27-28% assets under management compound annual growth rate and 23-24% earnings CAGR over FY23- 26 with return on equity crossing 18% in FY26 (without assuming further dividend payouts).
At potentially four-five times leverage in the very long run, Aptus Value can deliver 22-25% return on equity.
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