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Nirmal Bang Report
Aavas Financiers Ltd. reported 20% YoY growth in net profit, marginally below our estimate due to higher-than-expected operating costs and credit costs. Assets under management growth stood at 4.3% QoQ (23.3% YoY), broadly in-line with our estimate, driven by healthy growth in disbursements at 4.9% QoQ (26.5% YoY).
The management re-iterated AUM growth to be ~22-25% going forward. Net interest income growth was strong at 31% YoY as calculated net interest margin on the loan book expanded in Q3 FY23 to 9.14%.
Total revenue growth was lower at 20.5% YoY due to lower assignment income. Operating expenses continued to remain elevated as the company is investing in technology, manpower and branch expansion, resulting in operating profit growing by 11.6% YoY to Rs 1,415 million.
Provisions declined by 69% YoY, leading to 20% YoY growth in profit after tax at Rs 1,073 million. Asset quality was largely stable, with gross stage III at 1.1% versus 1.08% in Q2 FY23.
Uptick in non-performing asset ratios was partially attributed to revised classification norms.
The management highlighted that Aavas Financiers is entering phase 3.0 and is preparing to evolve into a long-term institution.
Its endeavor is to be the largest affordable housing finance company in India, led by people and technology. Thus, the company has revamped its top leadership bandwidth with focus on long-term strategy.
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