Prabhudas Lilladher has given Buy recommendation for AAVAS Financiers with a target price of Rs. 3500 in its research report issued on Dec 02, 2021
Prabhudas Lilladher’s research report on AAVAS Financiers
We reckon Co. will continue to command premium valuations as (1) AAVAS is the only niche dominant play in the self-employed affordable housing finance space which has been overlooked not only by banks but also NBFCs, (2) It maintains pricing power backed by risk-adjusted yields and cost effective funding (3) It has a differentiated lean operating model backed by technology (4) It boasts of in-house risk management systems and impeccable asset quality (5) It maintains strong capital buffers with superior execution skills. We expect impressive growth across earnings parameters with 24% AUM CAGR, NIMs at avg. 7.2%, NPA of 1.3% and industry leading ROA/ROE at 3.2%/17.0%+ over FY22-24E.
Outlook
We initiate coverage on Aavas Financiers Ltd with a BUY rating and price target of Rs 3,500 (8x PABV Sept-FY23E). AAVAS mirrors strong business model of yesteryear’s Gruh Finance.