Motilal Oswal Maintains Neutral Rating on AAVAS Financiers, Targets Rs 1565

AAVAS Financiers Posts Strong 4QFY26 Results

Motilal Oswal's research report on AAVAS Financiers reveals that the company's 4QFY26 Profit After Tax (PAT) grew by 18% year-over-year (YoY) to approximately INR1.8 billion, meeting expectations. For the fiscal year 2026 (FY26), PAT increased by 14% YoY to approximately INR6.5 billion.

The company's Net Interest Income (NII) in 4QFY26 also witnessed a YoY growth of 18% to approximately INR3.2 billion, in line with expectations. Other income surged by 19% YoY to INR1.2 billion, surpassing the previous quarter (PQ) and previous year (PY) levels of approximately INR1 billion. However, operating expenses (Opex) rose by approximately 19% YoY to INR2 billion, which was around 8% higher than estimated.

The cost-income ratio remained stable YoY at approximately 46% in 4QFY26, with the previous year (PY) and previous quarter (PQ) ratios also standing at around 46% and 43%, respectively. Profit Before Provision (PPoP) grew by 18% YoY to INR2.4 billion in 4QFY26, meeting expectations. For FY26, PPoP increased by 15% YoY to approximately INR8.7 billion.

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Outlook and Recommendations

Motilal Oswal estimates that AAVAS Financiers will experience a Compound Annual Growth Rate (CAGR) of 18% in Assets Under Management (AUM) and 19% in PAT over the fiscal years 2026-2028 (FY26-28E). The research firm also forecasts a Return on Assets (RoA) and Return on Equity (RoE) of 3.4% and 15%, respectively, by FY28.

As a result, Motilal Oswal reiterates its Neutral recommendation for AAVAS Financiers with a Target Price (TP) of INR1,565, based on 1.8x FY28E Book Value Per Share (BVPS).