Aadhar Housing Finance, a Blackstone-backed lender, is sufficiently capitalized to support planned expansion and annual loan growth of about 20% and does not expect to raise fresh capital for at least the next four years.
“Our capital adequacy today is upwards of 40%. Even if we keep expanding by around 50 branches every year for the next four years and grow at 20-22% annually, we do not need capital,” Rishi Anand, managing director and chief executive officer, said in an interview with Mint. “There is no capital raise on the anvil right now. We are sufficiently capitalized.”
The company plans to add about 50 branches during FY27, taking its network beyond the current 628 branches. Of these additions, 70% of the branches will be in emerging locations and 30% in urban locations. The expansion will be concentrated across the country's key markets, with Gujarat among the focus states, while the company remains relatively cautious on regions such as parts of eastern India and Kerala.
Anand said the lender's increasing presence in talukas and district centres is expected to strengthen growth without compromising asset quality. While the gross non-performing asset (GNPA) ratio stood at 1.31% at the end of the June quarter, he described it as a seasonal increase and reiterated confidence that the company will close the current financial year with GNPA in the range of 1.08-1.10%, broadly in line with the previous year.
According to Anand, lending in smaller markets allows the company to be more selective in choosing borrowers while also earning higher risk-adjusted spreads.
“When you do small business, you can pick and choose the better consumer profile. Secondly, these locations give us risk-adjusted higher spreads. We anticipate the risk and price accordingly, so the portfolio remains balanced,” he said.
Incremental targets
The company is targeting relatively modest incremental business in new locations, aiming for ₹50 lakh to ₹1 crore of additional monthly business from individual branches, rather than pursuing aggressive volume growth.
Anand said Aadhar Housing continues to focus primarily on retail home loans. During the April-June quarter, home loans accounted for about 74% of disbursements while loans against property (LAP) constituted 26%, compared with the company's usual mix of about 70:30.
He said LAP remains focused on low-income households with an average ticket size of about ₹9 lakh to ₹11 lakh and is spread across markets rather than concentrated in any area. Anand also expressed confidence in the resilience of the company's borrower base despite global economic uncertainties and concerns over affordability, going by cheque bounce rates.
“The bounce rates have been very stable. There has been no shift, which gives us comfort that this segment has not been impacted,” he said.
He said cheque bounce rates have remained stable over the past eight quarters.
Anand asserted that affordable housing demand remains stronger than widely perceived, contending that conventional real estate data often misses a significant part of the market. According to Anand, a large proportion of customers are from segments that are not adequately reflected in mainstream housing market reports.
“We are seeing a lot of positivity in demand. Many reports on affordable housing are slightly biased because they do not capture self-construction loans, secondary market purchases and loans against property,” he said.
Anand said the interest subsidy scheme offered by the government’s Pradhan Mantri Awas Yojana (PMAY) to facilitate affordable housing continues to benefit eligible borrowers, particularly in tier-II and tier-III cities, although the subsidy generally comes after the purchase or construction of the house and is therefore not the primary trigger for demand.
Affordable housing challenges
He said the ministry of housing and urban affairs has remained receptive to feedback while implementing PMAY 2.0 and that the current design of the interest subsidy scheme does not require major changes.
“The current design of PMAY 2.0 is perfect. Rather than changing the scheme, there should be greater awareness and consumer education so that more eligible borrowers can benefit,” he said.
Anand said the biggest challenge in affordable housing is not demand but the availability of genuinely affordable homes, particularly because rising land prices have pushed up housing costs.
“In metropolitan cities, affordable housing should typically be in the ₹25 lakh-40 lakh range. Governments will have to continue supporting affordable housing through subsidized land and public-private partnerships. That process has started, but it will take time,” he said.