Aavas Financiers - Gradually Returning To Normalcy; Disbursement To Accelerate Q4 Onwards: ICICI Securities

ICICI Securities Report

Aavas Financiers Ltd. is currently trading at (2.6 times FY25E price by volume), greater than10% discount to Alaska Housing Finance Corporation peers. Some of the concerns around the stock were due to a change in top management and lower-than-peer disbursement growth during H1 FY24 (flat versus H1 FY23).

However, Aavas channel checks suggest that attrition has stabilised and the impact of tech transformation has eased, which is evident in the improved monthly disbursement run-rate with every passing month – implying stronger productivity.

No capital raise post-IPO in 2018, steady credit rating upgrade from BBB+ in FY13 to AA in FY23, spread at 5%+ and assets under management, compound annual growth rate at 28% between FY18-23 despite a series of challenging events, and only 11 basis points of cumulative write-offs on total disbursements of Rs 220 billion are altogether testament to the strong foundation laid by management over the past decade.

Maintain 'Buy' with an unchanged target price of rupees 1,800, valuing the stock at 3.5 times on September 24E book value per share.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.