Synopsis:
Citi initiates coverage on Aavas Financiers with a buy rating, Rs. 2,350 target price, citing disbursement recovery, improving metrics, attractive valuations, and 25-30 percent discount to peers, recommending accumulation on dips.
During Wednesday’s trading session, shares of an affordable housing finance company, primarily serving low- and middle-income self-employed customers, surged 6 percent on BSE, after global brokerage firm CITI maintained a “buy” rating on the stock, with a potential upside of about 47 percent.
With a market capitalisation of Rs. 12,666 crores, the shares of Aavas Financiers Limited closed in the green at Rs. 1,600 on BSE, up by around 4.6 percent, as compared to its previous closing price of Rs. 1,530.25. The stock has delivered negative returns of nearly 7 percent in the last one year, and has fallen by over 6 percent in a month.
Brokerage Target & Outlook
Global brokerage firm CITI has initiated coverage on Aavas Financiers Limited with a ‘buy’ rating and a target price of Rs. 2,350 per share, representing a potential upside of nearly 47 percent from its Wednesday’s closing levels.
The brokerage notes that “stabilisation is underway” and “recovery is in sight.” It highlights visible signs of disbursement normalisation and believes that key operating metrics likely bottomed out in Q1. Citi recommends investors to “buy the dips” as it anticipates a gradual recovery in performance.
Citi Research analysts said Aavas is on course for a steady turnaround after a 6-7 percent downward earnings revision following a weak first quarter. It further pointed out that the AUM is expected to gain momentum in the second half of FY25.
The brokerage also emphasised the company’s attractive valuation, trading at a 25-30 percent discount to peers such as Aadhar Housing Finance and Aptus Value Housing Finance. This favourable risk-reward profile underpins Citi’s recommendation to accumulate the stock on declines.
Financials & More
AAVAS Financiers reported a significant growth in revenue from operations, experiencing a year-on-year rise of nearly 16 percent, from Rs. 542 crores in Q1 FY25 to Rs. 628 crores in Q1 FY26. Likewise, the company’s net profit increased during the same period from Rs. 126 crores to Rs. 139 crores, representing a rise of nearly 10 percent YoY.
In Q1 FY26, the Assets under Management (AuM) of Aavas Financiers grew by 16 percent YoY from Rs. 17,841.5 crores in Q1 FY25 to Rs. 20,740 crores in Q1 FY26. Additionally, disbursements stood at Rs. 1,150 crores, factoring one one-time impact of transitioning to realisation basis disbursement recognition model.
AAVAS Financiers Limited, registered as a housing finance company with the National Housing Bank (NHB), is engaged in the business of long-term financing activity in the domestic markets to provide housing finance. Its product offering consists of home loans for the purchase or construction of residential properties, and for the extension and repair of existing housing units, loans against property and MSME loans.
Written by Shivani Singh
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