Aadhar Housing Finance (AADHARHFC) Q2 FY27 Profit Rises 16% as Loan Book Grows, But Margins Narrow
The affordable housing lender posted steady growth in disbursements and assets, though profitability faced pressure from rising costs and one-off charges.
Aadhar Housing Finance reported a 16% yearly rise in net profit to ₹308 crore for Q2 FY27, driven by an 18% jump in its loan book. However, net profit margin dipped slightly as funding costs rose and employee stock option expenses weighed on earnings.
For affordable housing lenders, growth is measured in both loan books and the margins they can preserve while serving low-income borrowers. Aadhar Housing Finance delivered on the first count in the September quarter, but the second showed the strain of a competitive market.
Revenue rose 16.8% year-on-year to ₹1,048 crore, while profit grew 15.6% to ₹308 crore. The net profit margin, however, slipped 30 basis points from a year ago to 29.4%. Sequentially, profit grew a stronger 9.1%, with the margin recovering 100 basis points from a low base in the June quarter.
Revenue & profit
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 1,048.0YoY +17% | 992.9 | 897.1 |
| Profit (₹ Cr) | 308.0YoY +16% | 282.4 | 266.5 |
| Net Profit Margin (%) | 29.4YoY -1% | 28.4 | 29.7 |
The Growth Engine Fires
The top-line momentum came from a 22% yearly jump in loan disbursements to ₹2,577 crore, as reported by The Hindu BusinessLine. Assets under management grew 18% to ₹32,643 crore. Management, in its earnings call covered by AlphaStreet, reaffirmed full-year guidance for 20% growth in both AUM and profit.
Where the Squeeze Appeared
Profit growth lagged revenue as costs climbed. Finance costs rose 13.9% year-on-year to ₹389 crore. More notably, the quarter included a ₹14 crore charge for employee stock options, a recurring expense that started this year. Adjusted for this, profit growth would have been 20%, according to the Ventura Securities report.
The reported net profit margin remains below its trailing twelve-month average of 29.8%. A credit rating upgrade to AA+ by all major agencies, noted by The Hindu BusinessLine, may help ease future funding costs.
The Outlook Amid Competition
Management's confidence in its 20% growth target is set against a shifting competitive landscape. A Systematix Research report cited by the Economic Times notes that affordable housing lenders now need to expand into new catchments as mature branches see growth stagnate.
For Aadhar, this means its planned addition of 40-50 branches this year is crucial. The focus will be on protecting its lending spread, which management said was near 5.7%, rather than chasing market share at the expense of yields.
Key Points
- Loan disbursements grew 22% year-on-year, driving an 18% expansion in the assets under management to ₹32,643 crore.
- Net profit increased 15.6% to ₹308 crore, though the net profit margin contracted 30 basis points from the year-ago quarter.
- Employee stock option charges of ₹14 crore dampened reported profitability; adjusted profit growth was 20%.
- The company received a credit rating upgrade to AA+, which could support future borrowing and margin stability.
Hexa Perspective
The quarter confirms Aadhar's ability to grow its core book in a segment with structural demand. The tension lies in whether it can maintain this pace without letting margins erode further.
Rising finance costs and the new ESOP expenses are now embedded in the cost structure. The path to sustaining its 20% profit growth guidance hinges on its ability to pass on funding costs, manage credit risks in a competitive environment, and successfully open new branches in less-penetrated markets.
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