Aptus Value Housing to expand AUM to ₹25,000 crore by 2027, eyes Tier-3 and 4 markets

Chennai-based Aptus Value Housing Finance India Ltd (Aptus) expects its consolidated assets under management (AUM) to grow to ₹25,000 crore in three years from about ₹10,000 crore now.

For this the company has a multi-pronged strategy in place, including deeper penetration in existing markets and contiguous expansion into newer markets, improvement in loan officer productivity and increase in the average loan ticket size in line with inflation, according to P Balaji, Managing Director.

As of September 2024, Aptus and its fully owned non-banking finance company subsidiary—Aptus Finance India Private Ltd—had an AUM of ₹7,309 crore (comprising home loans, quasi-home loans, insurance loans, and top-up loans) and ₹2,370 crore (comprising small business loans and non-home loans), respectively.

As of September 2024, promoters and promoter Groups, including M Anandan and Padma Anandan, had a 24.43 per cent stake in Aptus. Investor-promoter Westbridge Crossover Fund LLC had a 29.47 per cent stake. The balance of shareholding is with the public.

Balaji said: “We’ll end this year with a book size of around ₹12,000 crore. In another two years time, our AUM should reach Rs 20,000 crores, which is a 30% growth. In three years, our book size will be around ₹25,000 crore.”

He assessed that to grow the company’s consolidated loan book to about ₹15,000 crore by March-end 2026, the funds requirement will be about Rs 3,000 crore. So, it plans to raise funds from diversified sources such as Banks, the National Housing Bank, External Commercial Borrowing, term loan from SIDBI, Mutual Funds and insurance companies.

“We might not raise equity. Our leverage is very low. On a total ₹10,000 crore balance sheet, we have a net worth of almost ₹4,200 crore. The balance ₹5,800 crore is borrowing. In the next three years, our growth will come out of borrowings,” said Balaji in an interaction with BusinessLine.

He emphasised that most affordable housing finance companies (HFCs) have been started by first-generation entrepreneurs. They are not part of big groups like Tata, Cholamandalam, or Bajaj.

“So, what happens is, beyond a point they (HFCs) need additional capital to grow. So, obviously, an individual, who is a first-generation entrepreneur, might not have that kind of deep pockets to put in money. All HFCs need capital. Money is the raw material for any NBFC or HFC. This sector is attractive because it has a good growth path,” said Balaji.

The Aptus Chief noted that quite a few financial institutions—banks and housing finance companies—are able to serve the needs of salaried customers in urban areas. However, in Tier-3 or 4 locations, where people don’t have readily verifiable income documents, it becomes difficult to prove that these customers are earning the kind of income they are supposed to earn so that the repayments are done properly.

“So that is where the sweet spot lies. We believe that there is a huge potential for growth in this line because if you look at the macro factors, the mortgage to GDP ratio is low at 11 per cent. Of course, this shortage is more acute in Tier-3 and 4 locations where most of the affordable housing finance companies operate,” he said.

Levers for growth

Aptus’ geographical expansion strategy is that even as it goes deeper into its current stronghold in the South—Tamil Nadu, Karnataka, Andhra Pradesh (AP), Telangana, and the union territory of Puducherry—it is expanding continuously, entering Maharashtra and Odisha. Currently, it has 298 branches, Balaji said.

The next lever of growth is increasing loan officer productivity. So, if a loan officer currently logging in three (loan) files per month increases to four, the company will grow by another 25 per cent.

“Similarly, if the budgeted strength in a particular branch is, let’s say, five, but they currently have four people, we will increase the strength by one person, who will contribute to growth.

“Currently, our average ticket size is around ₹8-8.5 lakhs. If we increase this to ₹10 lakhs, without affecting the LTV (loan to value) ratio or the installment to income ratio, that is going to contribute to growth,” the Aptus chief said.

Balaji emphasised that the increase in the average ticket size will be matched by inflation as the construction cost increases.

“So we need to fund that part (increase in the cost of construction) also….otherwise what will happen is the customer might go to the local money lender to borrow that additional money. We should not allow this. So, basically, to take care of the inflation, we will be increasing the ticket size.

“But we do not want to go beyond ₹10 lakhs average ticket size. Once this goes up to, say, ₹12 or 13 lakhs, it gets into an almost formal kind of a situation where competition will be there,” he said.

ends.