Home First, Aptus, Aadhar are Bernstein’s top HFC stock picks; shares react

Shares of Home First Finance Company India Ltd, Aptus Value Housing Finance India Ltd, Aadhar Housing Finance Ltd gained up to 5 per cent in Thursday’s trade, as Bernstein initiated coverage of the three stocks with ‘Outperform’ rating. 

Home First Finance Company India Ltd climbed 5 per cent to Rs 1,432 apiece as Bernstein suggested a target price of Rs 1,650, saying HomeFirst stands out for its demonstrated ability to consistently replicate its operating model across multiple states. “It also benefits from its smaller size, faster growth, superior productivity metrics, and greater flexibility to sustain profitability compared to peers,” Bernstein said.

On Aptus, Bernstein suggested a target price of Rs 400, saying Aptus’s higher share of fixed-rate loans and small business lending positions it well in a falling rate environment, particularly given the now-reasonable valuations.

Aptus Value Housing Finance India shares were trading 1.15 per cent higher at Rs 344.45. This stock hit a high of Rs 347.80 earlier today. Aadhar Housing Finance Ltd rose 2.94 per cent to hit a high of Rs 462.45, but later wiped off most of its gains.  In the case of Aadhar, Bernstein set the target at Rs 550 apiece as the largest and most geographically diversified player in the segment, Aadhar serves as a good proxy for the sector. 

“We expect it to maintain its steady growth trajectory of 20 per cent AUM CAGR,” it said.

Meanwhile AAVAS Financiers Ltd fell 0.3 per cent and PNB Housing Finance was flat at Rs 1,099. Bernstein suggested Market-Perform ratings on both the stock.  For Aavas, it suggested a target of Rs 2,070, saying Aavas lags peers on yield and-profitability and has seen a sharp slowdown in growth recently. 

“While a near-term rebound is possible, inconsistent outcomes from its geographic expansion make us cautious on its long-term outlook,” it said.

For PNB Housing Finance, it suggested a target of Rs 1,020. “While the shift toward smaller-ticket loans – as prime mortgages become increasingly competitive – is a sound strategy, the aggressive expansion in this new segment, with high reliance on balance transfer-ins and DSA sourcing, raises concerns,” Bernstein said.