Prabhudas Lilladher Maintains Buy Rating on AAVAS Financiers with a Price Target of Rs 1585

Prabhudas Lilladher Downgrades AAVAS Financiers to ACCUMULATE

AAVAS Financiers, a leading financial services company, has reported a growth in its 4Q disbursements and Assets Under Management (AUM). According to the company's latest research report by Prabhudas Lilladher, the 4Q disbursements grew by 16% year-over-year (YoY), while AUM saw a growth of 15% YoY. However, the report suggests that the company's growth aspirations of 20%+ may be conservative, given the high competitive intensity in the market.

AAVAS Financiers AUM Growth Projections

The report indicates that the company's spreads are expected to moderate in FY27 and FY28E, as the book reprices with a reduction in the Prime Lending Rate (PLR) and an increase in the cost of borrowing due to hardening of bond yields. On the other hand, the company is expected to see an improvement in its operational expenses (opex) as productivity benefits flow through, and it does not anticipate any further significant investments in technology.

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Based on these factors, Prabhudas Lilladher has tweaked its FY27 and FY28E estimates, factoring in a pick-up in growth and improved opex. The report also adjusts the multiple to 1.9x (earlier 1.8x) with a target price (TP) of Rs 1,585. However, the research firm has downgraded the stock to ACCUMULATE, considering that it has run up by 29% in the past month.