Berstein looking at the prospects of housing and finance stocks in the country after the RBI has resorted to back-to-back rate cuts, has initiated coverage on housing stocks. The global brokerage’s preferred picks from the space are Aadhar Housing, Aptus Value and Home First Finance.
For each of these stocks, the brokerage has initiated its coverage with ‘outperform’ call.
Bernstein on Aadhar Housing
The brokerage has initiated the call with the target at Rs 550. The brokerage said that the company is the largest and most geographically diversified player; to grow AUM at 20 per cent CAGR.
Bernstein on Aptus Value
The brokerage initiated coverage on the stock with ‘outperform’ and target at Rs 400. The brokerage likes the stock on its fair valuation. Also, the higher share of fixed-rate loans & small business lending positions augur well for the company in a falling rate environment.
Bernstein on Home First Finance
Initiating an outperform call with the target at Rs 1,650 per share. The company demonstrated ability to consistently replicate its operating model across multiple states. Also, it benefits from its smaller size, faster growth, and superior productivity metrics. The company is said to have a greater flexibility to sustain profitability compared to peers.
Nonetheless, the brokerage also listed laggards from the pack- which are PNB Housing and Aavas Financiers.
Bernstein on PNB Housing
The brokerage initiated a market perform call on the stock with the target at Rs 1,020 per share. The brokerage decoded that the shift towards smaller ticket loans, as prime mortgages becomes increasingly competitive, is a sound strategy.
The aggressive expansion in the new segment, with high reliance on balance transfer-ins and DSA sourcing, raises concern, added the brokerage.
Bernstein on Aavas Financiers
The brokerage has initiated a market perform call on the stock with the target at Rs 2,070 per share. The brokerage mentioned that the stock lags peers on yield and profitability and has seen a sharp slowdown in growth recently. Near-term rebound possible, inconsistent outcomes from geographic expansion renders cautious outlook on long-term outlook.
