Summary
Aptus Value Housing Finance India Limited - Q3 FY26 Earnings Call Summary Thursday, February 05, 2026 11:00 AM
Event Participants
Executives 5 Amit Singh, M. Anandan, Balaji P., Manoharan C.T., Sanjay Mittal
Analysts 10 Amit Khetan, Ansh Mehta, Avnish Tiwari, Balkrushna Vaghasia, Chintan Shah, Daksh Choudhary, Kunal Shah, Manik Bansal, Mayank Mistry, Rajiv Mehta, Rohit Maheshwari, Satyam Kumar, Shailesh Kanani, Varun Palacharla
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Assets Under Management (AUM) | ₹12,330 crores | +21% YoY; Growth driven by expansion and higher ticket sizes despite small-ticket pullback. |
| Disbursements (Q3) | ₹1,030 crores | +11% YoY; Reflects conscious shift away from loans <₹7 lakhs. |
| Disbursements (9M) | ₹2,768 crores | +9% YoY; Impacted by proactive tightening in MFI-linked segments. |
| Gross NPA | 1.56% | Largely stable; Slight uptick in MSME/SME segment noted during the quarter. |
| Net NPA | 1.18% | Maintained through aggressive write-off policy (500+ days). |
| 30+ DPD | 6.48% | Slight uptick attributed to festive season collection volatility and MSME stress. |
| Net Interest Margin (NIM) | Not explicitly stated | Net Income Margin grew 26% YoY to ₹406 crores. |
| Spreads | 8.9% | Improved due to effective reduction in cost of funds. |
| Cost of Funds | 8.3% | -40 bps YoY; Benefited from rating upgrade and negotiation with lenders. |
| Return on Assets (ROA) | 7.9% | Sustained high profitability amidst portfolio recalibration. |
| Return on Equity (ROE) | 20.2% | Maintained above 20% benchmark; among the highest in the industry. |
| Cost-to-AUM | 2.7% | Stable YoY; Includes impact of 40 new branches and IT investments. |
| Credit Cost (9M) | 50 bps | Maintained within guided range despite aggressive provisioning. |
Geographic & Segment Commentary
- Southern Markets (AP, Telangana, TN): Andhra Pradesh grew 23% YoY despite a high base and ticket-size restrictions; Tamil Nadu grew 15% with management targeting 18% as clusters are corrected and competitive intensity is managed.
- New Markets (Odisha & Maharashtra): Scaling footprint with 10 branches each planned by year-end; AUM in these states doubled YoY to ₹109 crores with strong portfolio performance.
- Product Mix: Housing loans remain the core focus; however, MSME/SME loans saw a temporary uptick in NPAs and collection pressure, which management expects to resolve in Q4.
Company-Specific & Strategic Commentary
- Ticket Size Strategy: Management is exiting the <₹7 lakh loan segment (previously 17.5% of disbursements) to mitigate MFI-related contagion risks and address rising construction costs.
- Pricing Optimization: Reduced interest rates by 50-75 bps for incremental housing loan customers to remain competitive against SFBs and PSU banks, with a minimal <10 bps impact on overall portfolio yields.
- Distribution Channels: Piloting a “connector” model in TN and AP to augment traditional shop-and-spoil sourcing; planned expansion to 60-70 new branches in FY27.
- Operational Efficiency: Invested heavily in digital sourcing and a construction ecosystem app to drive lead generation and credit accuracy.
- Regulatory Compliance: Financials include a ₹3.85 crore impact related to the implementation of the New Labour Code.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| AUM Growth | 22% - 24% | Revised from earlier 25%+ to reflect <₹7 lakh exit and cautious macro stance. |
| AUM Target | ₹25,000 crores by FY29 | Likely delayed by 1-2 quarters due to proactive portfolio cleaning. |
| Credit Cost | 50 bps | Consistent guidance despite 500-day write-off policy. |
| Branch Expansion | 60 - 70 branches in FY27 | Focus on deepening presence in new states and high-growth southern pockets. |
| Opex to AUM | 2.7% - 2.8% | Slight upward pressure expected from rapid branch expansion and IT spend. |
Risks & Constraints
| Risk | Context |
|---|---|
| Asset Quality in MSME | Management noted a “temporary blip” in MSME NPAs and collection efficiency due to consumption-driven borrowing; pursuing aggressive Q4 recoveries. |
| Competitive Intensity | High competition in Tamil Nadu from HFCs, SFBs, and PSU banks; risk of talent attrition at the branch level as new players enter the segment. |
| Macro Volatility | Management acknowledged that overall growth is linked to economic activity, which has seen recent volatility impacting the broader financial services sector. |
Q&A Highlights
Exit from Small Ticket Loans
- Question: What is the impact of discontinuing loans <₹7 lakhs on AUM and disbursements? (Kunal Shah)
- Answer: The segment dropped from 17.5% to ~9% of lending and currently represents 10-11% of total AUM; the disbursement gap is being offset by higher average ticket sizes (ATS) in other segments (P. Balaji).
Yields and Pricing
- Question: How will the rate cut on incremental home loans impact spreads? (Mayank Mistry)
- Answer: Rate reduction of 50-75 bps is only for incremental housing customers, not existing ones or LAP/SME; the total impact on portfolio yields is less than 10 bps (P. Balaji).
Asset Quality Deep-Dive
- Question: What explains the sequential jump in stand-alone impairment charges? (Chintan Shah)
- Answer: It is a timing “lead-lag” issue between the HFC and NBFC entities due to the 500-day write-off policy; aggregate credit costs remain at 50 bps (P. Balaji).
Future Growth Confidence
- Question: Why has AUM guidance been lowered multiple times over the last few quarters? (Satyam Kumar)
- Answer: Management prioritizes portfolio quality over growth targets; decisions to exit riskier segments (MFI-linked LAP) necessitated a more conservative 22-24% growth range (M. Anandan).
Key Takeaway
Aptus Value Housing Finance delivered a steady Q3 FY26 with 21% AUM growth and a sector-leading ROE of 20.2%. The quarter was characterized by a strategic pivot, as the company proactively exited the sub-₹7 lakh loan segment to insulate the balance sheet from MFI-related stress, while simultaneously reducing incremental housing loan rates by 50-75 bps to defend market share. Although 30+ DPD saw a seasonal uptick to 6.48% and MSME asset quality faced minor pressure, management maintains a robust 50 bps credit cost guidance supported by strong ₹1,877 crore liquidity. Strategic focus now shifts to geographic diversification in Odisha and Maharashtra and an accelerated branch rollout (60-70 units) in FY27. While the long-term ₹25,000 crore AUM target may face a minor delay, the company remains positioned to deliver sustainable 22-24% growth with resilient margins.
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