Aadhar Hsg. Fin. (AADHARHFC)

FairStock Score: 59/100 — STEADY

Score breakdown: P/E: 2/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Sales growth of 15.84% and profit growth of 15.13% indicate consistent compounding.
• ROE of 16.16% is healthy and supports the 3.33 price-to-book multiple.
• Piotroski F-Score of 7/9 suggests solid profitability and operational efficiency.
• Latest quarter net profit of ₹281 Cr on sales of ₹943 Cr reflects a strong net margin.
• Promoter holding of 75.19% aligns management with minority shareholders.

Concerns

• Valuation is stretched: P/E of 19.14, P/B of 3.33, and price 58% above Graham Number with zero dividend yield.
• Free cash flow is deeply negative at ₹-2,867 Cr due to loan growth requiring continuous external funding.
• Altman Z-score of 1.32 and EV/EBITDA of 543.38, while less meaningful for a lender, still warrant caution.
• No dividend means total return depends entirely on future stock price appreciation.

AI Analysis

At ₹487.75, the market is paying 19.14 times earnings and 3.33 times book value for a housing finance company growing sales and profits around 15%. That is not a bargain. Graham taught me to buy with a margin of safety; here the price sits nearly 58% above the Graham Number of ₹289.93. A 16.16% ROE and a Piotroski score of 7/9 show competent operations, and promoter holding of 75.19% keeps interests aligned. The latest quarter's ₹281 crore profit on ₹943 crore revenue is respectable. But housing finance is inherently leveraged; a debt-to-equity of 2.56 amplifies mistakes. Free cash flow is deeply negative at ₹-2,867 crore because loan growth consumes capital. That is the business model, but it means I depend on continued access to cheap borrowings. The Altman Z-score of 1.32 and the enormous EV/EBITDA of 543.38 are distorted for a lender, yet they remind me not to apply a standard industrial lens. Is there a moat? Affordable housing lending can be sticky if underwriting and collection systems are good, but this is a competitive space with banks and other NBFCs. At 19 times earnings and zero dividend yield, the market already prices in years of steady 15% growth. For a disciplined value investor, a good company is not automatically a good stock. I need a lower entry price or evidence of materially faster compounding before committing further capital. This is a stalwart franchise, but at this price, the margin of safety is missing.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer