Aadhar Housing Finance Ltd (AADHARHFC) Q1 FY27 Earnings Call: Guides 20% AUM and PAT Growth, Spread to Settle at ~5.5%

Aadhar Housing Finance Ltd held its Q1 FY27 earnings call on July 31, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Headline financials for the June quarter

• AUM of Rs.31,364 Cr — grew 18% YoY in Q1 FY 2026-2027, with home loans constituting 73% of the portfolio and non-home loans 27%.
• Disbursement of Rs.2,036 Cr — on a check-clearance basis (new recognition from Q1 FY 2026-2027); Rs.2,359 Cr on a check-handover basis, delivering 19% YoY growth like-for-like.
• PAT of Rs.282 Cr — increased 19% YoY from Rs.237 Cr in Q1 FY 2025-2026, with ROA of 4% and ROE of 14.7% for the quarter.
• Spread held at 5.8% — portfolio exit yield of 13.5% and exit cost of funds of 7.7% (down from 8% a year earlier), despite a 15 bps RPLR reduction in February 2026.
• GNPA of 1.31% — improved 3 bps YoY; Stage 3 provision coverage at 34%. Stage 2 stood at 3.3%, improving 40 bps YoY.
• Cost-to-income of 36.3% — includes a Rs.14 Cr ESOP charge; ex-ESOP the ratio was 33-34%. Employee headcount at 5,671 as of 30 Jun 2026.

AUM trajectory, branch expansion, and portfolio mix

• 18% YoY AUM growth in Q1 FY 2026-2027 — management reaffirmed the FY 2026-2027 medium-term guidance of 20% AUM growth, 20% PAT growth, and 17-18% full-year disbursement growth.
• Q2 FY 2026-2027 disbursement guided at ~23-25% — substantially covering the Q1 timing shift from the check-realization accounting change, with no lost business. The next three quarters of FY 2026-2027 are expected to see disbursement growth upward of 20%.
• 628 branches across 22 states — covering 550+ districts. 45-50 new branches planned for full-year FY 2026-2027, with catch-up expected in Q2 and Q3 after only 2 openings in Q1.
• Urban-emerging 50-50 mix strategy — ~300-350 branches in emerging locations. Management aims to maintain spreads above 5.5% through this balance; urban yields at 11.5-12% and emerging yields at 14-14.8%.
• Non-home loan disbursement declined ~22% YoY — a conscious decision due to the West Asia crisis. Management expects normalization to a 70-30 home vs non-home mix by Q3 FY 2026-2027 (currently 76-24).
• State-level diversification — no single state exceeds 15% of AUM or incremental disbursement. Average ticket size rose modestly to Rs.11 lakhs from Rs.10.4 lakhs, balanced by the emerging-locations mix.

NPA trends, credit costs, and balance-transfer dynamics

• GNPA at 1.31%, Stage 2 at 3.3% — improved 3 bps and 40 bps YoY respectively. Management guided NPA to end FY 2026-2027 at ~1.1%.
• Collection efficiency of 99% — 1+ DPD at 7% as of end-Q1 FY 2026-2027, improving 20-25 bps YoY vs Q1 FY 2025-2026.
• BT-out rate improved to 5% — down 20 bps YoY and one of the lowest levels in 8-10 quarters. The improvement was driven by customer service and a central retention team of 20 members using data-analytics segmentation.
• Credit cost of 40-45 bps in Q1 FY 2026-2027 — described as seasonal by management, who are confident of pulling it down to 23-25 bps for the full year FY 2026-2027, consistent with historical trends.
• Retention strategy uses red-amber-green segmentation — targeted top-ups or yield reductions based on customer tenure (MOB) and bounce rates, launched around FY 2024-2025, contributing to sustained BT-out improvement.

Spread outlook, funding costs, and operating leverage

• Spread of 5.8% in Q1 FY 2026-2027 — guided to settle at ~5.5% over a 2-3 year period (by FY 2028-2029E), with management stating no appetite to go below that level.
• Cost of funds at 7.7% (exit) — down from 8% a year ago. Management does not foresee an imminent increase in Q2 or Q3 FY 2026-2027 based on current market readings.
• Cost-to-income improved trajectory — at 36.3% in Q1 FY 2026-2027 (incl. ESOP); ex-ESOP at 33-34%. Management guided for annual improvement of 30-40 bps in cost-to-income and 6-7 bps in cost-to-AUM on an ongoing basis.
• Employee cost rose 27% YoY — includes Rs.14-15 Cr of ESOP costs not present in Q1 FY 2025-2026. Adjusted growth was ~14-15%, in line with annual increments of 10-12%.
• 75% of the loan book is RPLR-linked — enabling pass-through of permanent cost increases after ALCO and board approvals. Short-term volatility is not passed on to customers.
• NHB drawdown of Rs.750 Cr — at an average cost of 6.9%, including an AHF portion of Rs.149 Cr at 4.3%. Excluding NHB, estimated cost of funds for Q1 FY 2026-2027 was 7.4-7.45%.

Capital adequacy, return targets, and liquidity position

• CAR of 42.9% — comprising 42.4% Tier 1 and 0.5% Tier 2. Balance sheet risk weight is 45%, with an internal operational risk buffer of 6-7% of capital per ICAAP methodology.
• No capital return plans for 3-4 years — management cited the need to retain the Rs.1,000 Cr IPO primary proceeds for growth over the next 3-4 years.
• ROE guided to ~17% by FY 2028-2029E — based on stable spread and ROA assumptions, with annual ROA expected to remain steady at 4.3-4.4% as a steady-state metric.
• Liquidity buffer of Rs.2,371 Cr — equivalent to ~10% of total borrowings of Rs.20,000 Cr at end-Q1 FY 2026-2027. The target liquidity buffer during the quarter is 7-8%.
• Borrowing mix — 49% banks, 24% NHB, 17% NCDs, and 7% ECB as of 30 Jun 2026.

Guidance reaffirmation, AI buildout, and risk monitoring

• FY 2026-2027 guidance reaffirmed — management reiterated 20% AUM growth, 20% PAT growth, and 17-18% full-year disbursement growth, with the next three quarters expected to deliver disbursement growth upward of 20%.
• Six-layer AI architecture under institutionalisation — spanning origination, underwriting, surveillance, collections, and retention, with five proprietary platforms under development. Management expects additional cost benefits from these initiatives.
• Geopolitical and monsoon risks — management remains watchful of West Asia uncertainty impacting fuel-dependent trade and travel, and the monsoon outlook affecting rural and semi-urban cash flows. NRI-linked exposure is minimal.
• Competitive inroads noted in affordable housing — management estimated only a 5-7% predicted overlap with Aadhar's low-income segment, with no broader disruption flagged.
• Overhead cost growth capped — management targets 10-11% full-year growth on non-employee costs for FY 2026-2027, with Q1 overheads declining >25% QoQ due to the absence of Q4 contest expenses.
• Demand momentum in urban locations — management reported urban (tier 1/2) demand growing faster than expected over the last two quarters, with no demand-side challenges, and aims to balance growth between urban and emerging markets.