Broker’s call: Aptus Value (Buy)
Target: 350 rupees
CMP: INR 246.75
Aptus Value Home offers a favorable long-term risk reward at current valuation (2.7x PABV and 16x PE in FY25E), as the positives of the structural business model appear to be under-reported. While concerns about long-term inventory supply are defensible, concerns about management transition and business scalability seem extended.
We view the appointment of Mr. Balaji as Managing Director (formerly CEO and CFO) as a non-disruptive development with growth/quality execution more vertical and more or less institutionalized in Aptus, and the potential for Mr. Anandan to be a guiding strategy even after the current period (ends with 24). December) by being a non-executive chairman.
Aptus has demonstrated regional diversification/scalability with comparable asset quality across disparate southern markets. While existing markets can comfortably support 25-30 percent growth in the coming years, contiguous entry/expansion and calibration into new states should help long-term prospects.
Structurally, portfolio spread and operating metrics should remain in a narrow range supported by benefits from niche positioning, scale, technology investments, and credit rating. Aptus’ strong customer and property underwriting and focused collection mechanism is reflected in lower cost of credit and GNPL, and negligible actual loan write-offs.