Prabhudas Lilladher has given Accumulate recommendation for AAVAS Financiers with a target price of Rs. 2250 in its research report issued on Oct 22, 2022
Prabhudas Lilladher’s research report on AAVAS Financiers
Aavas saw a good quarter with earnings beat led by higher off-book income and better NII (a function of higher NIM and AuM growth). Asset quality was stable with lower provisions. Balanced asset-liability profile and immediate reset of floating rate assets vis-à-vis liabilities ensured that NIM was stable QoQ. AuM grew by 23.6% YoY (PLe 22.6%) and guidance is to consistently grow between 22-25% as demand exists, however asset quality would be preferred over growth. Opex intensity could keep costs elevated for 6-9 months owing to ramp up in distribution network and tech spends, however cost/income may start tapering off from FY24. While we raise AuM growth for FY24 by ~2%, we cut PAT by 8% due higher opex.
Hence we trim multiple from 5.0x to 4.6x but roll forward to Sep’24 ABV to arrive at a TP of Rs2,250 (earlier Rs2300). Change rating from HOLD to ACCUMULATE.