Thematic Affordable Housing Finance

Affordable Housing Finance Market

Affordable housing finance supports low- and middle-income households seeking to purchase a home without significant financial strain. The report classifies households as EWS, LIG, MIG and HIG using income and housing features. Demand drivers include urbanisation, population growth, nuclear families, rising disposable income and lower interest rates; government measures cited include RERA and interest-rate subsidies under PMAY.

About 70 million Indian households are expected to become eligible for home ownership over the next 10 years. Together with upgrade demand, this could create a requirement for 100 million new houses. The report estimates a financing opportunity of INR 45 tn. for 31.2 Mn. housing units by 2030, 3.5x the existing loan volume of INR 13 tn.

PMAY-2.0 increased housing targets: an additional 1 Crore EWS / LIG / MIG urban families are targeted for pucca houses, alongside an additional 2 Crore rural houses during FY25 to FY29.

Key Sector Findings

• AUM growth: The peer group’s average AUM growth rate was 23.7% CAGR from FY21 to FY25. The affordable housing finance sector’s FY26 AUM growth outlook is 23%.
• Growth leaders: Home First Finance and India Shelter Finance recorded FY21–FY25 AUM CAGRs of 32.4% and 38.9%, respectively. The report notes that both have consistently outpaced average growth, albeit from a lower base.
• FY26 guidance: Aptus Value Housing guided to AUM growth of 28% to 29%; India Shelter Finance to 30% to 35%; Aadhar Housing to 20% to 22%; and Aavas Financiers to 18% to 20%. Home First Finance gave disbursement guidance of INR 5,600 to 5,800 Cr.
• Business mix: Home First Finance has the highest salaried-borrower share among the peers shown at 68%. Aptus Value Housing and India Shelter Finance have predominantly self-employed borrowers, at 78% and 75%, respectively.
• Returns: Aptus Value Housing and India Shelter Finance have higher RoA and RoE than other peers, according to the report’s comparison. For Q1-FY26, Aptus Value Housing reported RoA of 7.9% and RoE of 20.1%; India Shelter Finance reported 6.0% and 17.2%.

Affordable Housing Finance Peer Snapshot

The report notes that investors are willing to pay a market premium for growth and asset quality. Peer P/BV multiples vary, with Aptus Value Housing at 4.03x and SRG Housing Finance at 1.88x* in the comparison.

AUM Growth and Management Guidance

AUM for the six affordable housing lenders shown increased from INR 33,532 Cr. in FY21 to INR 78,477 Cr. in FY25 and INR 81,517 Cr. in Q1-FY26. The report’s average year-on-year growth was 24% in FY25; its FY26 outlook for the sector is 23%.

• Aadhar Housing: FY26 AUM growth guidance of 20% to 22%.
• Aavas Financiers: FY26 AUM growth guidance of 18% to 20%.
• Aptus Value Housing: FY26 AUM growth guidance of 28% to 29%, with a long-term aspiration to reach INR 25,000 Cr. AUM by FY29.
• Home First Finance: FY26 disbursement guidance of INR 5,600 to 5,800 Cr.
• India Shelter Finance: FY26 AUM growth guidance of 30% to 35%.

Sector Risks

• Borrower income risk: Aptus Value Housing and India Shelter Finance have 78% and 75% self-employed borrowers, respectively. The report notes that self-employed borrowers may be more susceptible to income shocks.
• Geographic concentration: Aptus Value Housing’s AUM is concentrated in southern India. The report identifies regional uncertainties as a vulnerability and says other players’ spread across multiple states may make them more resilient to regional issues.
• Elevated delinquencies: Q1-FY26 showed higher stress across lenders. For example, Aadhar Housing’s 1+ DPD was 7.1% versus 6.3% year-on-year, while Aptus Value Housing’s 30+ DPD was 6.45% versus 6.31%.
• Portfolio seasoning and scale: The report identifies low portfolio seasoning as a risk for India Shelter Finance and SRG Housing Finance, and cites SRG’s small operating scale and concentration in Rajasthan and Gujarat.
• Leverage and funding rates: Aavas Financiers and Home First Finance are described as having higher leverage than Aptus Value Housing and India Shelter Finance. Floating-rate exposure is also higher for Aadhar Housing and Aavas than for Aptus, based on the figures provided.

Our View

The report presents affordable housing finance as a growth opportunity supported by housing demand, PMAY-2.0 and an expected FY26 sector AUM growth rate of 23%. That opportunity sits alongside elevated Q1-FY26 portfolio stress and lender-specific risks from borrower mix, geographic concentration, seasoning and leverage; the report does not give a sector-wide stock recommendation or target price.

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