Which Finance - Housing Stocks Are Deep Value Picks in Week of Jul 10, 2026?

Sector Pulse

The Indian housing finance sector is exhibiting an IMPROVING demand environment, though performance is heavily bifurcated by customer segment. Affordable and near-prime lenders like AADHARHFC and BAJAJHFL are outperforming, posting 23% and 21% YoY PAT growth respectively, alongside 20%+ AUM growth. Conversely, traditional prime lenders like LICHSGFIN are facing severe headwinds, reporting a 3.4% YoY PAT decline and missing loan book growth targets (5% actual vs 10% guided) due to intense competition from PSU banks offering rates as low as 7.35%.

Catalysts Playing Out Across the Pack

The dominant catalysts across the sector are Asset Quality Improvement and Interest Cost Reduction Deleveraging. Asset quality is stabilizing or improving for 4 of the 5 constituents. AADHARHFC lowered its GNPA guidance to 1.1%-1.15%, and LICHSGFIN saw Stage-3 EAD improve to 2.45%. Simultaneously, the cost of funds is dropping sector-wide. LICHSGFIN reported a 14 bps sequential reduction to 7.28%, and APTUS saw costs decline to 8.3%. This is allowing companies to protect margins or pass on rate cuts to borrowers, as seen with AADHARHFC dropping rates by 15 bps. Geographical Expansion is also a key driver for affordable players, with APTUS planning 60 to 70 new branches next year.

What Managements Are Guiding

Forward guidance reflects a MIXED tone. Growth expectations are being tempered by some; APTUS lowered its AUM growth guidance from 25%+ to 22%-24% due to a conscious pullback in sub-7 lakh loans, and LICHSGFIN lowered its loan book growth target to 5%. However, margin and asset quality guidance is largely positive. BAJAJHFL beat its NTI compression estimates, revising full-year expectations to an 8-10 bps drop versus the prior 15-20 bps. SAMMAANCAP remains focused on legacy book reduction, having collected INR 5,000 crores with a target of INR 15,000 crores by year-end.

Shared Risks (9-type taxonomy)

The sector is grappling primarily with labor and regulatory risks. Employee attrition is elevated, with AADHARHFC reporting 22% attrition (excluding regret attrition) and APTUS noting competition for human resources at the branch level. On the regulatory front, the implementation of the New Labor Code resulted in one-time financial hits for AADHARHFC (INR 16 crores) and APTUS (INR 3.85 crores). Furthermore, BAJAJHFL highlighted a 3% QoQ drop in Tier-1 capital due to new RBI guidelines requiring capital charges on undisbursed loan tranches.

Bottom Line

The housing finance sector is navigating a transition period where falling borrowing costs are supporting margins, but intense bank competition and elevated attrition are challenging top-line growth. Investors should favor affordable and near-prime lenders executing on geographical expansion and product mix shifts, while remaining cautious on prime lenders exposed to aggressive PSU bank balance transfers.