AAVAS Financiers (AAVAS IN) – Q2FY27 Result Update – Growth visibility intact; operating efficiency to improve – BUY
Published on 27 Oct 2026
Q2 disbursements grew 21% YoY while AUM growth remained healthy at 16% YoY. Management reiterated its guidance of 16-17% AUM growth for FY27 (20%+ for long term), with improving RO productivity and deeper market penetration supporting the growth outlook. We build AUM growth of 17%/18% for FY27E/FY28E. Spreads remained above 5%, with incremental yield improvement to support margins. Asset quality remains resilient, with no visible signs of stress across customer segments and limited exposure to agricultural income-dependent borrowers. We build credit cost at 20/18bps for FY27/FY28E. Improving employee productivity, technology adoption and branch-level profitability are expected to drive operating leverage and lower opex. We revise our estimates to factor in sustained growth momentum and improving cost efficiency, supporting higher profitability. We value the stock at 1.9x Sep’28 P/ABV (earlier 2.0x) with a TP of INR1,685. Maintain BUY.
