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Dolat Capital Report
Incorporated in FY10, Aptus Value Housing Finance Ltd.'s strength lies in underwriting of informal segment in tier-II/III cities, aiding industry best margins. This, along with the housing finance companies' lean cost structure and strong underwriting aid return on asset of over 6% on a steady state basis (7% for nine months-FY22).
With low leverage at two-times and robust profitability, we expect consistent uptick in return on equities (at 14.5% currently) over time, with little need to raise capital for the next several years.
Overall stress metrics have held better than peers through Covid-19, with nil write-offs since inception. Improving cost of fund (recent rating upgrade) and performance consistency should continue to drive Aptus Value Housing Finance's valuations in our view.
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