HDFC Securities Recommends ‘Buy’ On India Shelter; Sets Target At Rs 1,060: Why ISFCL Is Attractive?

With a target price of Rs 1060 against the current market price, brokerage company HDFC Securities is optimistic about India Shelter Finance Corp. Ltd. and sees a good upside potential of around 19% over the next two to three quarters.

Tier II and Tier III cities are the primary focus of India Shelter Finance Corp. (ISFCL), a prominent housing finance company in India with a wide distribution network. With 290 branches in 15 states and an active clientele of over 116,000, India Shelter, which has its headquarters in Gurgaon, Haryana, has established a pan-India presence. With FY25 Assets Under Management (AUM) of Rs 8,712 crore, a 38% CAGR since FY19, and strong profitability (Q1 FY26 PAT up 43% YoY), the company continues to report strong financial growth

India Shelter Finance Corporation Target Price

Buy in Rs 890-920 band & add on dips in Rs 820-840 band, Base Case Fair Value: Rs 1000, Bull Case Fair Value: Rs 1060

"India Shelter is an attractive play on the increasing formalisation of informal self-employed financing. Despite industry-wide stress in micro-LAP and MSME segments, ISFCL's differentiated focus, prudent risk controls, and secured lending model underpin its confidence. We have envisaged a 29% CAGR in the loan book and expect RoE to expand from 15.1% to 18.6% by FY27E. We feel that investors can buy the stock in the band of Rs 890-920 add on dips in Rs 820-840 band (2.5x FY27E ABV) for the base case fair value of Rs 1000 (3x FY27E ABV) and the bull case fair value of Rs 1060 (3.2x FY27E ABV) over the next 2-3 quarters," said the research analysts of HDFC Securities.

Fundamental Reasons To Buy India Shelter Finance Corporation Shares

The main drivers of the buy call reason for India Shelter Finance Corporation are listed below, according to HDFC Securities.

Strong structural demand for Affordable Housing Finance

India's affordable housing market is still growing because of factors including urbanization, economic growth, and government initiatives like the Pradhan Mantri Awas Yojana. The affordable housing finance loan portfolio was valued at Rs 1.4 lakh crores in March 2025, according to ICRA projections. By FY28, the affordable housing companies loan portfolio is anticipated to have grown to Rs 2.5 lakh crores, with a compound annual growth rate (CAGR) of 20-22%.

"India Shelter is deeply focused on the large, underpenetrated affordable housing segment, with 91% of its AUM in Tier II/III towns and 71% of borrowers as first-time mortgage users. Robust policy tailwinds like steady government, infrastructure push, favorable regulatory stance and India's massive housing shortage-especially in LIG and MIG categories-support multi-year sectoral growth," said HDFC Securities.

Consistent growth and expansion

ISFCL's AUM CAGR of 38% from FY19 to FY25 indicates that it is still growing at a rapid pace. Its AUM increased 34% YoY in Q1 of FY26, and the management continues to adhere to its forecast of 30-35% growth for the year.

"ISFCL relies on a comprehensive on-the-ground presence and aims to further grow and diversify its distribution network. It has added 24 branches in Q1FY26 taking its network to 290 branches providing ongoing leverage for future scale-up. By capitalizing on favorable market opportunities and maximizing branch productivity, it anticipates to cater to the specific requirements of the self-employed target customer segment," commented HDFC Securities.

Strong asset quality metrics

"India Shelter's robust risk management infrastructure based on its in-house business rule engine, followed by physical visits by the credit officer helps it to on-board quality customers. Despite sectoral stress, GNPAs remain contained at 1.2% and credit cost at 0.5%; management is confident of maintaining 40-50 bps credit cost. While there has been a slight uptick in delinquencies with the 30+ days past due (dpd) increasing to 4.5% in Q1FY26 (3.1% in Q4FY25), management believes the same is transitory and expects higher recovery during the remainder of FY26. Further, the Company maintains a comfortable LTV of ~50-52% which helps to provide a significant margin of safety in the event of a default," commented the research analysts of HDFC Securities.

Strong capital profile to support growth

"ISFCL remains well capitalised with a net worth of Rs 2,836 crore and a capital-to-risk weighted assets ratio (CRAR) of 58.4% as on Q1FY26. The leverage remained low at 2.9 times. The company had raised primary equity of Rs 800cr crore through an initial public offering (IPO) in December 2023, which strengthened its capitalisation profile. ISFCL is well capitalised with sufficient headroom to achieve the planned growth in the near-to-medium term while maintaining prudent capitalisation," they further added.

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