Financial Services – Sector Update – Demand resilient through deeper market penetration
Published on 19 Mar 2026
We visited branches of Home First Finance (HOMEFIRS) and Aavas Financiers (AAVAS) (in Thane, Maharashtra, and Vapi, Gujarat) to assess demand trends, underwriting practices and sourcing dynamics in the affordable housing finance segment. Our interactions indicate that demand for small-ticket housing loans remains resilient, driven by first-time homebuyers and self-construction activity in Tier 3/4 markets. While banks are key competitors owing to lower interest rates and higher loan eligibility, HFCs continue to maintain relevance in the affordable housing segment through faster TAT, greater flexibility in assessing informal income profiles, and stronger local sourcing ecosystems such as connectors, referral networks and alternative lead channels. These structural advantages enable HFCs to penetrate underserved customer segments and sustain demand. We reiterate BUY on HOMEFIRS (TP of Rs 1,375 at 2.6x FY28E P/ABV) and AAVAS (TP of Rs 1,700 at 2.1x Dec-27E P/ABV)
