APTUS

: A Strong Tactical Investment Opportunity 📈

Corrected Valuation and Strong Performance:

's stock valuation has recently corrected, making it more attractive to investors. Despite the correction, the company has consistently delivered strong growth and market-leading return ratios. The exit of key promoter WestBridge, which sold its remaining stake in a large block deal, was absorbed by the market with a stock price increase, signaling strong investor confidence and easing concerns about a supply overhang. Key Competitive Advantages: The company is strategically positioned to capitalize on the acute housing shortage in semi-urban and rural areas. Its hybrid business model, which includes a significant portion of small business loans and quasi-home loans, gives it a competitive edge. The high percentage of low-income and new-to-credit customers in its portfolio allows Aptus to maintain high margins and yields compared to its peers. Positive Financial Outlook: Aptus's loan book is projected to grow in the 28-29% range in FY26, with a target of reaching ₹25,000 crore in assets under management by FY28. A recent credit rating upgrade from ICRA AA- to AA+ (stable) is expected to diversify its funding base and lower borrowing costs. Combined with potential repo rate cuts, the high share of fixed-rate loans (80%) is likely to expand its net interest margin. Unmatched Profitability: The company's highly efficient, in-house business model keeps its operating expenses low. This, along with healthy net interest margin expansion and improved productivity, is expected to help Aptus maintain a high return on assets (RoA) of around 7%, significantly above the industry average of 3.5-4%. The return on equity (RoE) is also guided to increase to 22%.