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Nirmal Bang Report
Aavas Financiers Ltd. reported ~10% YoY growth in net profit, above our estimate on the back of lower tax. Assets under management registered healthy growth at 8.2% QoQ (24.8% YoY), driven by an uptick in disbursements at 31.5% QoQ (23% YoY).
Aavas Financiers' management re-iterated AUM growth guidance of ~20-25% going forward. Net interest income growth was strong at 24% YoY as calculated net interest margin on the loan book remained stable at 9.14%. Net revenue grew by 18.3% YoY as other income declined by 12% YoY.
Moreover, growth in operating expenses moderated to 14% YoY (1.1% QoQ), resulting in operating profit growing by 21.6% YoY to Rs 1,649 million. Provisions increased by 82% QoQ on a lower base.
However, due to lower tax in Q4 FY23, profit after tax grew by 18.2% QoQ to Rs 1,267 million. Asset quality improved, with gross stage-III at 0.92% versus 1.13% in Q3 FY23. The management re-iterated its commitment towards Aavas 3.0 and is preparing to evolve into a long-term institution.
Moreover, they indicated that the overall leadership is intact and with the exit of MD Mr. Sushil Kumar Agarwal, the focus on long-term strategy would not change.
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