Aavas Financiers (AVAS.NS): Growth Sustained, GS3 Rise Contained, Spreads Contract

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Aavas Financiers (AVAS.NS): Growth Sustained, GS3 Rise Contained, Spreads Contract

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21 Jul 2026 15:13:29 ET │ 17 pages

Aavas Financiers (AVAS.NS)

Growth Sustained, GS3 Rise Contained, Spreads Contract

CITI'S TAKE

Aavas posted in-line earnings, with GS3 accretion remaining contained,

credit costs at 24bps, while opex growth was controlled at 10% YoY (down

10% QoQ). This was partly offset by 14bps QoQ spread compression to Buy

5.06%, reflecting 10bps PLR reduction in June 2026 (25bps cumulative cut Price (21 Jul 26 15:30) Rs1,521.70

since March 2026). Disbursement momentum improved off a low base,

Target price Rs2,100.00supporting AUM growth of 15% YoY and 2% QoQ. Management has guided

FY27 AUM growth of 17–18% (medium-term target: 20%+), underpinned by Expected share price return 38.0%

disbursement growth of 22–23%. Strategically, the focus remains on Expected dividend yield 0.0%

portfolio rebalancing towards HL. Guided spread moderation to 'marginally

Expected total return 38.0%below 5%' for FY27 is likely to be mitigated by direct sourcing efficiencies

and other income-side levers. Incorporating the lower spread outlook, we Market Cap Rs120,656M

cut FY27E/FY28E earnings estimates by 2-3% and introduce FY29E. We US$1,279M

maintain our TP of ₹2,100, based on 2.6x Sep'27 P/BV. Maintain Buy.

Disbursement growth accelerated (on a low base); AUM growth sustained at 15%

YoY — Disbursements, on a low base, spiked 41% YoY to Rs16.1bn (with June Price Performance

disbursements at Rs6bn) — driven by pickup in volumes, improved productivity, and

(RIC: AVAS.NS, BB: AAVAS IN)38% YoY growth in HL segment. Monthly AUM accretion improved by ~50% YoY in

1Q, enabling it to achieve in three months what previously took close to five months.