Shares of housing finance companies saw a sharp uptick in trade, with PNB Housing Finance leading gains, rising over 7%, followed by Home First Finance and Aavas Financiers, both up over 6%. Aptus Value Housing gained over 5%, while Aadhar Housing Finance also moved higher as of 11:30 am, reflecting renewed investor interest in the segment. This rally comes on the back of RBI leaving the repo rate unchanged in today's MPC outcome.
Bernstein also turned constructive on affordable housing finance companies (AHFCs), highlighting a potential inflection point in growth and asset quality.
Bernstein notes that after a period of moderation, AHFCs are showing sequential improvement in disbursement growth, while early-stage delinquencies are stabilising. Concerns around asset quality and macro headwinds now appear priced in, creating room for upside.
The brokerage adds that the secured nature of lending, with exposure to home loans and Loan Against Property (LAP), positions AHFCs better than broader NBFC peers in a volatile environment.
Among its top picks, Bernstein has maintained an Outperform rating on Aadhar Housing Finance with a target price of Rs 600, and on Home First Finance Company, where the target price has been raised to Rs 1,430, citing strong execution and scalability.
Aptus Value Housing Finance also continues to carry an Outperform rating with a target price of Rs 350, supported by consistent growth visibility.
Meanwhile, Aavas Financiers, with a reduced target price of Rs 1,440, and PNB Housing Finance, with a lowered target of Rs 880, are rated Market‑Perform, reflecting relatively limited upside potential after recent gains.
AHFCs continue to benefit from strong liability franchises, including longer-tenor borrowings and access to NHB funding, which reduces reliance on short-term instruments. A higher share of floating-rate loans also supports margin transmission, limiting downside risks. Following the broader NBFC sell-off, valuations across AHFCs have corrected to levels below larger peers, despite steady earnings visibility. Bernstein sees this as a favourable entry point, with the segment still delivering healthy growth and return ratios.
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