Aptus Value Housing Finance India’s share price climbed over 3% in intraday trade on the BSE on Monday, 29 June, even as stock market sentiment was cautious amid a rise in crude oil prices due to a fresh escalation in tensions between the US and Iran.
The NBFC stock climbed 3% to an intraday high of ₹273.25 before paring some gains. Aptus Value Housing shares traded 1.40% up at ₹268.80 around 2:15 pm. Equity benchmark Sensex was 0.48% down at 76,729 at that time.
Shares of the housing finance company (HFC) have been enjoying healthy buying interest of late. They have jumped over 35% in the last three months. So far in June, the stock is up more than 3%.
Year-to-date, however, the stock is down nearly 5% compared to a 10% fall in the benchmark Sensex.
shares hit their 52-week low of ₹193.50 on 30 March this year after hitting a 52-week high of ₹364.85 on 21 August last year.
Citi sees a 32% upside potential
Global financial firm Citi has a buy call on the stock with a target price of ₹350, implying a 32% upside from the stock’s previous day (25 June) close of ₹265.10.
As per Citi, with its niche segment focus and strong internal processes, Aptus has delivered strong, profitable growth for a long period.
Citi highlighted that Aptus has among the highest ROA (return on assets) and ROE (return on equity), despite low leverage, in the affordable housing finance space, driven by high NIM (net interest margin) and a low-cost operating model.
Credit cost has also been low across market cycles. However, Citi pointed out that incrementally, it is facing increased competition in its core geographies, which could impact margins and consequently return ratios going forward.
“Our target price of ₹350 for Aptus is based on a two-stage Gordon Growth model. Key assumptions are: cost of equity of 13.3%, normalised RoE of 18%, growth during stage one 20%, and steady state growth 4%. These give us a target multiple of 2.7 times September 2027E BVPS (book value per share),” said Citi.
“Senior management changes, adverse impact on profitability due to geographic expansion beyond core states, and an increase in competition in affordable housing are the key downside risks that could impede the shares from reaching our target price. Aptus’ customer segment is more vulnerable in a weak environment,” Citi added.
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