AHFCs: Secular, Secured, Small-cap Compounders

Research evidence excerpt

AHFCs: Secular, Secured, Small-cap Compounders

Asia Pacific Insight

July 10, 2026 10:01 AM GMT

Morgan Stanley India Company Private Limited+MIndia Financials Kushan Parikh, CFA

Equity Analyst

AHFCs: Secular, Secured, Small- Kushan.Parikh@morganstanley.comSubramanian Iyer +91 22 6118-1082

Subramanian.Iyer@morganstanley.com +91 22 6118-2234

cap Compounders Sakshi V Chaplot

Research Associate

Sakshi.Chaplot@morganstanley.com +91 22 6118-2228

Disbursements growth and loan growth appear poised to

accelerate. Asset quality concerns and idiosyncratic issues are

largely resolved, i.e. we are looking at an upcycle for secured,

good quality, structural compounders, from beaten down

valuations. Key OWs: Aptus, HomeFirst and PNBHF. India Financials

Asia Pacific

We think we are at the beginning of a strong up-cycle in earnings and stock Industry View Attractive

returns at affordable housing finance companies (AHFCs). What’s Changed

Aavas Financiers Ltd

1) Disbursements growth (a key metric for investor confidence) is poised to pick (AVAS.NS) From To

up at AHFCs in F27 (MSe 20-26% YoY; vs 11-13% in F26), as early as in 1QF27 Price Target Rs1,490.00 Rs1,555.00

(MSe 25-35% YoY). Multiple transient issues – US trade tariffs, state-specific issues, Aptus Value Housing Finance

India Ltd (APTS.NS) From To

microfinance (MFI) and MSME (medium, small, micro enterprise) stress, irregular Price Target Rs395.00 Rs405.00

weather – seen in F25-26 are largely resolved (and in our base case). AUM growth

Can Fin Homes Ltd (CNFH.NS) From To

should sustain or pick up to 21-25% YoY from already good levels. Price Target Rs1,025.00 Rs1,055.00

2) Asset quality remains healthy despite concerns, which we believe are largely Home First Finance Co Ltd

(HOME.NS) From To

resolved.