Prabhudas Lilladher Sees AAVAS Financiers Reaching Rs 1500

AAVAS Financiers Research Report

Key Highlights

• AAVAS Financiers has navigated management changes, promoter stake sale, and regulatory headwinds over the past three years, which are now largely subsided.
• Disbursements are expected to increase driven by branch expansion, CSC scale-up, and the RRO model.
• The company projects AUM growth of 18% in FY27 and 20% in FY28E.

Outlook and Recommendations

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We expect AAVAS Financiers to maintain its growth trajectory driven by branch expansion and the RRO model. However, execution in non-RJ markets is crucial for achieving projected growth rates. A potential credit rating upgrade by July-26 is likely to support net interest margins (NIMs).

Financial Projections

• Expected AUM growth: 18% in FY27 and 20% in FY28E
• Net interest margins (NIMs) expected to benefit from a potential credit rating upgrade
• Operating expenses (Opex) are expected to be elevated in FY27 due to new branch additions
• Credit cost is expected to remain benign at 15-16bps

Investment Recommendation

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We maintain a BUY rating on AAVAS Financiers with a target price of Rs 1,500 (1.8x FY28E P/ABV). The stock has corrected 11.5% over the past month, providing an attractive entry point for investors.