INDIASHLTR

: Accelerated Growth & Strong Returns in Affordable Housing Finance

is Poised for valuation re-rating amid sector tailwinds 🔹 **Industry Outlook** - AHF sector expected to grow 20–22% CAGR, reaching ₹2.5 lakh crore by FY28. - Growth driven by rural demand, supportive policies, and ample liquidity. 🔹 **India Shelter’s Growth Trajectory** - Projected loan book growth of 30–35%, outperforming industry average. - AUM likely to cross ₹10,000 crore by H1FY26; Q1FY26 AUM stood at ₹8,712 crore (+34% YoY). - Stock has outperformed benchmarks YTD, supported by operational strength. 🔹 **Branch Expansion & Operational Efficiency** - Added 24 branches in Q1; total now 290. - Maintains annual branch addition guidance of 40–45. - Tech-led productivity gains driving opex-to-AUM ratio improvement (expected 15–20 bps annually). 🔹 **Asset Quality & Credit Cost** - Q1 saw a rise in delinquencies (30+DPD up 140 bps QoQ), mainly in MSME LAP segment. - Regulatory headwinds in Karnataka and Tamil Nadu impacted collections, but recovery is expected. - Credit cost stable at 50 bps, aligned with guidance. 🔹 **Profitability Metrics** - Portfolio yield remains high at 15%, aided by co-lending spreads and lower funding costs. - Cost of funds moderated by 20 bps; further 20 bps reduction expected in FY26. - NIM guided to remain around 9%; spread expansion of 20 bps anticipated. 🔹 **Return Ratios & Valuation** - RoA surged to 6% in Q1FY26 post-IPO; expected to normalize to ~4.5% with increased leverage (4x). - RoE improved to 17.2%; projected to reach 18% medium term. - Trades at 2.5x FY27e P/B; strong growth and returns may trigger valuation re-rating. 🔹 **Strategic Positioning** - Deep penetration in tier 2/3 towns; targets underserved segments. - Government schemes like PMAY expected to support long-term demand. 🔹 **Investor Takeaway** - High growth, stable margins, and improving return ratios position India Shelter as a compelling long-term play in the AHF space.