Credit Costs Weigh, But

APTUS

Retains Industry-Leading Returns

has faced growth moderation and asset quality stress due to its high exposure to self-employed borrowers (~78% of AUM). Despite these challenges, Aptus continues to deliver industry-leading return ratios with ROA at 7.9% and ROE at 20% in 9MFY26, supported by strong margins and cost discipline. Following a sharp stock correction of over 30% after promoter WestBridge Capital’s exit, valuations appear attractive, with potential for re-rating once growth accelerates and credit costs stabilise. Business Performance & Strategy - AUM: ₹12,330 crore, concentrated in semi-urban and rural markets. - Growth moderation: Guidance revised to 22–24% CAGR (from 25%) due to recalibration in LAP segment. - Geographic mix: Tamil Nadu (~31% of AUM) remains core; expansion underway in Odisha and Maharashtra. - Loan mix: Higher share of non-housing/LAP loans; focus shifting to higher-ticket, better-quality customers. Profitability & Margins - NIM: 13.4% in 9MFY26, supported by lower borrowing costs and fixed-rate asset mix. - ROA: 7.9%, ROE: 20%, among the highest in the sector. - Hybrid model yields superior spreads compared to peers (Home First, Aadhar Housing, Aavas). Asset Quality & Risk Management - Stress evident in self-employed borrower segment. - Early delinquency uptick led to higher credit costs. - Focus on stronger collections and prudent underwriting to stabilise asset quality. - Credit cost expected to remain steady with resilient collections. Valuation & Outlook - Current valuation: 1.6x FY28E book value, attractive relative to growth potential. - Stock correction reflects sector-wide concerns on credit costs and growth slowdown. - Re-rating hinges on: - Loan growth revival via branch expansion and higher-ticket loans. - Stabilising asset quality. - Sustained industry-leading return ratios. - Suitable for investors with higher risk appetite, given geographic concentration and exposure to vulnerable borrower segments.