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Nirmal Bang Report
Key Points
We met the management of Aavas Financiers Ltd. The key takeaways from the meeting are:
Disbursements normalised in June-23-July-23 and the company expects to deliver assets under management growth of 20-25% in FY24
Competitive intensity remains high in housing loans; hon-housing loans portfolio share is expected to expand to 35%, driven by micro, small, and medium enterprises. lending
Spreads to be maintained at ~5%; opex remains elevated as the company invests in the franchise (tech transformation, loan origination system, loan management systems roll-out).
We expect AUM to clock a compounded annual growth rate. of ~22% over FY23-FY25E and expect FY25E return on assets/return on equity at 3.4%/15%.
We maintain buy on Aavas with a target price of Rs 2,000 (3.4 times September 2025E adjusted book value per share).
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