AAVAS - AAVAS Financiers

📊 NSE: AAVAS 🏢 Finance - Housing 📅 Last Updated: 12/13/2025 17:45

💰 Financial Performance

Revenue Growth by Segment

Assets Under Management (AUM) grew 18% YoY to INR 20,420 Cr in FY25. As of March 31, 2025, the portfolio mix consists of Individual Home Loans at 68% (INR 13,885 Cr), MSME loans at 19% (INR 3,880 Cr), and Loan Against Property (LAP) at 13% (INR 2,655 Cr). Q2FY26 AUM reached INR 21,356 Cr, representing a 16% YoY increase.

Geographic Revenue Split

Operations are highly concentrated with the top 3 states (Rajasthan, Maharashtra, and Gujarat) accounting for 65% of total AUM as of June 30, 2025. This is a reduction from 71% in March 2022 as the company expands into 11 other states/UTs.

Profitability Margins

Net Interest Margin (NIM) stood at 5.7% in FY25, down from 6.0% in FY24 due to systemic interest rate hikes. However, Q2FY26 NIM expanded by 26 bps YoY to 8.04%. Return on Average Total Assets (RoTA) was 3.3% in FY25, though it moderated to 2.9% in Q1FY26.

EBITDA Margin

Not applicable for HFCs; however, Net Total Income grew 18% YoY in Q2FY26. Return on Average Tangible Net Worth (RoNW) was 14.3% in FY25 (INR 574 Cr PAT) compared to 14.1% in FY24 (INR 491 Cr PAT).

Capital Expenditure

Significant technology investments are being made in 'Aavas 3.0' including Salesforce for LOS, Oracle Flexcube for LMS, and Oracle ERP. While specific INR Cr for future capex is not disclosed, the company maintains a network of 397 branches as of June 2025.

Credit Rating & Borrowing

CARE AA rating with outlook revised from Stable to Positive in 2025. The company maintains a diversified funding mix: Banks/FIs (48%), NHB Refinance (14%), NCDs (11%), and Assignment/Co-lending (25%). Cost of funds is being optimized by shifting to EBLR-linked and shorter-tenure MCLR instruments.

⚙️ Operational Drivers

Raw Materials

Debt capital serves as the primary 'raw material', with borrowings totaling approximately INR 13,927 Cr (on-balance sheet) as of March 2025. Cost of borrowing was 8.04% in Q2FY26.

Import Sources

Sourced domestically from 32 lending relationships including public/private banks and All India Financial Institutions (AIFIs), plus multilateral agencies like IFC, ADB, and British International Investment.

Key Suppliers

Key lenders include National Housing Bank (NHB), International Finance Corporation (IFC), Asian Development Bank (ADB), and various domestic commercial banks.

Capacity Expansion

Current branch network stands at 397 branches across 14 states as of June 2025. The company aims to scale AUM to INR 55,000 Cr (INR 550 Bn) by FY30.

Raw Material Costs

Interest expense is the primary cost; the company proactively shifted a sizeable portion of borrowings to EBLR-linked instruments to benefit from potential interest rate softening.

Manufacturing Efficiency

Operating efficiency is measured by Opex to Asset ratio, which moderated to 2.8% in FY25 from 3.0% in FY24. Management targets keeping this ratio below 3% over the medium term.

Logistics & Distribution

Distribution is handled through 397 physical branches and a growing digital stack (Salesforce/Oracle).

📈 Strategic Growth

Expected Growth Rate

18-20%

Growth Strategy

Execution of 'Aavas 3.0' focusing on technology-led scaling, deepening penetration in 11 non-core states to reduce concentration, and leveraging a 20% growth target in the affordable housing segment. Growth is supported by a strong CRAR of 46.4% and internal accruals, precluding the need for external capital in the medium term.

Products & Services

Home Loans for purchase/construction, MSME loans secured by mortgage, and Loans Against Property (LAP).

Brand Portfolio

Aavas Financiers Limited

New Products/Services

Expansion of MSME and LAP segments which currently constitute 32% of the AUM mix.

Market Expansion

Gradual diversification into 11 states/UTs beyond the core Rajasthan/Maharashtra/Gujarat belt to mitigate geographic risk.

Market Share & Ranking

Positioned as a leading player in the affordable housing finance segment with a CAGR of 24% between FY19-FY24.

Strategic Alliances

Co-lending and direct assignment partnerships account for 25% of the funding mix.

🌍 External Factors

Industry Trends

The affordable housing industry is growing at 20%+. Trends include a shift toward technology-integrated underwriting and a transition from physical-only to 'phygital' distribution models.

Competitive Landscape

Competes with Small Finance Banks (like AU SFB) and other affordable HFCs. Aavas maintains a competitive edge through a superior cost of funds and a diversified liability franchise.

Competitive Moat

Moat is built on cash-flow based underwriting for unserved segments and a low lifetime write-off of < INR 40 Cr. This is sustainable due to deep local knowledge and a 13-year track record.