Synopsis: Aavas Financiers Limited gets a Buy from Jefferies on strong growth with 57% upside, while Morgan Stanley sees 34% upside but stays cautious, preferring better-valued peers.
This NBFC Stock, engaged in providing affordable home loans, focusing on low and middle-income customers in semi-urban and rural areas across India, is in focus after Jefferies and Morgan Stanley gave a Buy target of Rs. 1,875 and Rs. 1,600 per share, respectively, which has an upside potential of up to 56.55 percent.
With a market capitalization of Rs. 9,495.69 crore, the shares of AAVAS Financiers Limited were currently trading at Rs. 1,197.70 per equity share, down nearly 0.84 percent from its previous day’s close price of Rs. 1,207.85.
What is the News?
Jefferies, a prominent brokerage firm, has recommended a “Buy” call on AAVAS Financiers Limited with a target price of Rs. 1,875 per share, indicating an upside potential of 56.55 percent from its current price of Rs. 1,197.70 per equity share.
Jefferies maintains a Buy rating on Aavas Financiers, supported by steady growth and improving fundamentals. In Q4FY26, the company’s disbursements grew 16 percent year-on-year, showing strong demand for loans. Its assets under management (AUM) also increased by 15 percent YoY to Rs. 235 billion, reflecting consistent business expansion.
Asset quality has shown clear improvement, which is a positive sign for investors. GS3 assets improved by 12 basis points quarter-on-quarter to 1.07 percent, while 1+ days past due (DPD) declined by 63 basis points to 3.15 percent. This indicates better repayment behavior and lower risk in the loan book.
The stock is currently valued at around 1.5 times its FY27 estimated price-to-book value, which appears reasonable. Jefferies believes that a pickup in growth will be the key trigger for re-rating, making it an attractive long-term investment opportunity.
Similarly, Morgan Stanley, a prominent brokerage firm, has recommended an “Equal-weight” call on AAVAS Financiers Limited with a target price of Rs. 1,600 per share, indicating an upside potential of 33.59 percent from its current price.
Morgan Stanley maintains an Equal-weight rating on Aavas Financiers, highlighting only a marginal pickup in AUM growth. The brokerage expects consensus earnings estimates to be downgraded further, with its FY27-28 EPS projections being 5–9 percent lower than market expectations.
Although the stock has already seen some correction, Morgan Stanley believes that better upside opportunities exist in peer companies. It prefers Aptus Value Housing Finance India Limited and Home First Finance Company India Limited over Aavas, citing relatively stronger growth outlook and valuation comfort compared to Aavas Financiers.
Q4 FY26 Updates:
Aavas Financiers reported a steady performance in Q4 FY26 with AUM reaching Rs. 235 billion, growing 15 percent year-on-year. Disbursements stood at around Rs. 23.5 billion, up 16 percent YoY and 36 percent quarter-on-quarter, showing improved demand.
The company continued to expand its presence by adding 38 branches, taking the total to 435. It also maintained a strong financial position with Rs. 31.9 billion in liquidity. Incremental borrowings stood at Rs. 20.6 billion, while the securitized loan portfolio reached Rs. 4.7 billion. Credit rating was upgraded to AA by CARE and ICRA, indicating improved confidence in its outlook.
Company Overview:
Aavas Financiers Limited was founded on February 23, 2011, and is an Indian housing finance company headquartered in Jaipur, Rajasthan. It focuses on providing affordable housing loans to underserved and unserved segments, especially low- and middle-income and self-employed borrowers in semi-urban and rural India. Aavas has become a prominent non-banking financial company (NBFC) in India’s retail housing sector.
Recent Quarter Results:
Coming into financial highlights, AAVAS Financiers Limited’s revenue has increased from Rs. 597 crore in Q3 FY25 to Rs. 674 crore in Q3 FY26, which has grown by 12.90 percent. The net profit has also grown by 16.44 percent from Rs. 146 crore in Q3 FY25 to Rs. 170 crore in Q3 FY26. AAVAS Financiers Limited’s revenue and net profit have grown at a CAGR of 21.16 percent and 18.18 percent, respectively, over the last five years.
In terms of return ratios, the company’s ROCE and ROE stand at 10.1 percent and 14.1 percent, respectively. AAVAS Financiers Limited has an earnings per share (EPS) of Rs. 79.2, and its debt-to-equity ratio is 3.08x.
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