38% Return Potential! Why is Citi betting on these NBFC stocks rather than Bajaj or Shriram Finance?

Brokerage Citi has reiterated its ‘Buy’ rating on two housing finance NBFCs, while staying positive on other names beyond the larger names such as Bajaj Finance and Shriram Finance.

It has set target prices that indicate potential returns of around 37–38 per cent, or up to Rs 200 per share, from current levels.

The brokerage cited growth outlook, valuations and medium-term return ratios, even as the companies reported their December quarter results.

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Citi on Aadhar Housing Finance

Citi has maintained a Buy call on Aadhar Housing Finance with a target price of Rs 650 against the current market price of Rs 475.20. The target implies an upside of about 37 per cent.

The brokerage expects a medium-term AUM growth trajectory of 20–22 per cent, with the company crossing the Rs 500 billion milestone. It said spreads are likely to remain anchored above 5.6 per cent over the medium term.

Credit cost guidance stands at 25–27 basis points, with annual improvement of 40–50 basis points in cost-to-income ratio and 6–8 basis points in cost-to-assets. The stock trades at 2.3 times FY26 estimated book value for over 4.4 per cent return on assets and 16 per cent return on equity.

Aadhar Housing Finance Q3 FY26 Results

Aadhar Housing Finance reported an 18 per cent rise in net profit to Rs 281 crore in the December quarter of FY26 from Rs 239 crore a year ago. Total income increased to Rs 944 crore from Rs 798 crore, while interest income rose to Rs 833 crore from Rs 704 crore. Total expenses stood at Rs 568 crore compared with Rs 490 crore in the year-ago period.

Gross non-performing assets rose to 1.38 per cent at the end of December 2025 from 1.36 per cent a year earlier. Asset Under Management grew 20 per cent to Rs 28,790 crore from Rs 23,976 crore.

Aadhar Housing Finance Share Price History

The stock has gained 2.32 per cent in the past week. It is down 0.91 per cent in one month and 2.20 per cent over one year. The company’s market capitalisation stands at Rs 29,103.83 crore.

Citi on LIC Housing Finance

Citi has also maintained a Buy rating on LIC Housing Finance with a target price of Rs 730 against the current market price of Rs 530. The target indicates an upside of about 38 per cent.

The brokerage said LIC Housing Finance screens as one of the least expensive housing finance companies after underperformance of 15 per cent, 20 per cent and 30 per cent over the past three, six and 12 months, respectively. It noted that valuations have compressed to 0.6 times the FY27 estimated price-to-book and 5 times the FY27 estimated price-to-earnings. According to Citi, current pricing factors in conservative assumptions of 11.5 per cent return on equity and 4 per cent loan growth over the medium to long term.

The management is recalibrating its strategy by enhancing distribution, improving agent productivity, scaling direct and lead generation channels, exploring co-lending opportunities and expanding in the self-employed and affordable housing segments. Citi said risk-reward appears favourable with limited downside.

LIC Housing Finance Q3 FY26 Results

LIC Housing Finance reported a 2.55 per cent decline in net consolidated profit to Rs 1,398.27 crore in the December quarter of FY26 from Rs 1,434.89 crore a year ago. Net consolidated total income rose 2.04 per cent to Rs 7,214.28 crore from Rs 7,069.99 crore.

As of December 31, 2025, net worth stood at Rs 38,200.57 crore. Gross NPA was 2.45 per cent and net NPA was 1.13 per cent. Total disbursements increased 4 per cent to Rs 16,096 crore. Disbursements in the individual home loan segment rose 7 per cent to Rs 13,094 crore, while non-housing individual loans grew 10 per cent to Rs 2,304 crore. Project loans declined to Rs 583 crore from Rs 983 crore a year earlier.

LIC Housing Finance Share Price History

The stock has gained 2.32 per cent in the past week and is down 2.20 per cent over one year. The company’s market capitalisation stands at Rs 29,098.33 crore.