This NBFC stock gained 3.5% to ₹1,501.05 apiece after Jefferies gave a target price with an upside potential of 32%.
Aavas Financier Ltd belongs to the small-cap category of stock, with a market capitalization of ₹11,673 crores.
The company’s operational revenue has increased by 24 percent year on year from ₹411 crore in Q3FY23 to ₹508 crore in Q3FY24, while net profit increased by 9.3 percent from ₹ 107 crore to ₹117 crore.
AAVAS Financiers is primarily engaged in the business of providing housing loans to customers belonging to low and middle-income segments in semi-urban and rural areas. In the december quarter, the company made 65.9% revenue from the home loan business and 34% from mortgage loans.NBFC has over 351 branches across the country,
Jefferies maintains a buy on Aavas Financiers Ltd. The brokerage gave a target of ₹1,940 per share, representing an upside of 32 percent from Wednesday’s trading price of ₹1,475 per share.
Aavas has partnered with local channels to diversify its sourcing and the brokerage predicts that the company’s productivity will improve, reducing turnaround time from 13 days to 9 days.
Jefferies predicts that the Net Interest Margin will decrease to 7% in the fiscal year 2025-2026 from 7.1% in the fiscal year 2024. They also anticipate a 25% Compound Annual Growth Rate (CAGR) for Earnings Per Share (EPS) and Return on Equity (ROE) expansion from fiscal year 2024 to 2026.
The brokerage stated that the company has taken steps to increase credit growth, aiming for loan growth at the high end of its 20-25% guidance. It also anticipates a reduction in operating expenses once the impact of technology rollout expenses diminishes.
The NBFC increased its lending rates by 25 basis points starting from March 1 to counter margin pressure. The company’s management predicts a 40 basis points rise in the cost of funds due to tighter liquidity.
Written by Omkar Chitnis
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