1. At a Glance
An affordable housing finance company targeting the underbanked Bharat with surgical precision. Decent growth. Pristine asset quality. But no dividend to brag about.
2. Introduction with Hook
Imagine a bank, but with swag. No, not your chaacha’s PSU with free chai and angry tellers. Aavas Financiers is a money-lending ninja operating in Tier 2–3 India, quietly disbursing housing loans to self-employed folks who probably don’t even know what CIBIL means.
- 10-year revenue CAGR: 37%
- Gross NPA: A jaw-dropping 1.08% (Mar’25)
You thought unsecured personal lending was hot? Wait till you meet the king of collateralized rural housing.
3. Business Model (WTF Do They Even Do?)
Aavas is in the business of helping low- and middle-income families build, buy, or improve homes — especially in semi-urban and rural India.
Products:
- Home loans (70–75% of book)
- Loans against property (15–20%)
- MSME loans (10% and rising)
Target Customer:
Self-employed, no formal income proof, but strong cash flows. (Think local shopkeepers, electricians, auto guys — the backbone of India.)
Moat:
- Proprietary underwriting
- In-house sourcing (95% direct)
- Branch-led model with 400+ branches across 12 states
4. Financials Overview
Revenue & PAT have consistently risen over the last decade. Let’s dissect:
| Year | Revenue (Cr) | PAT (Cr) | Net Margin | EPS (Rs) |
|---|---|---|---|---|
| FY20 | 902 | 249 | 27.6% | 31.81 |
| FY21 | 1103 | 290 | 26.3% | 36.88 |
| FY22 | 1304 | 357 | 27.4% | 45.20 |
| FY23 | 1608 | 430 | 26.7% | 54.41 |
| FY24 | 2018 | 491 | 24.3% | 62.00 |
| FY25 | 2355 | 574 | 24.4% | 72.53 |
Notes:
- Sales CAGR (5Y): 21%
- PAT CAGR (5Y): 18%
- Asset quality: Rock solid
5. Valuation
Let’s crunch some spicy fair value estimates.
Current Price: ₹1,910
Book Value (FY25): ₹551
P/B Ratio: 3.47x
PE (TTM): ~26x
Fair Value Range:
- Base case: ₹1,850 – ₹2,050
- Bull case (MSME ramps, NIM stable): ₹2,200+
- Bear case (margin compression + yield pressure): ₹1,600
Translation? Fairly valued, but premium justified due to execution track record + clean book.
6. What’s Cooking – News, Triggers, Drama
- ESG Rating: NSE Sustainability gave them a 67 — not bad for a rural lender.
- NHB Award: Won Product Innovation award for “Self-Built Green Home” loans.
- Promoter Exit Watch: Promoter stake fell from 39% to 26.5%. Curious, innit?
Possible Trigger: Entry into newer states like UP, Bihar could unlock next leg of growth. MSME loan biz ramp-up = margin uplift?
7. Balance Sheet
| Year | Equity + Reserves (Cr) | Borrowings (Cr) | Total Assets (Cr) |
|---|---|---|---|
| FY20 | 2098 | 5382 | 7657 |
| FY23 | 3270 | 9887 | 13,411 |
| FY25 | 4361 | 13,918 | 18,618 |
Observations:
- Leverage has increased, but so has asset efficiency.
- CAR remains healthy, per RBI norms.
8. Cash Flow – Sab Number Game Hai
| Year | CFO (Cr) | CFI (Cr) | CFF (Cr) | Net Cash Flow (Cr) |
|---|---|---|---|---|
| FY22 | -1136 | -467 | 1623 | 20 |
| FY23 | -1920 | 196 | 1858 | 134 |
| FY25 | -1660 | 176 | 1475 | -9 |
Commentary:
Negative operating cash flow is common in loan-book-growth mode. Financing keeps the engine running.
9. Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE (%) | 14% | 14% | 14% |
| ROA (%) | 2.3% | 2.5% | 2.7% |
| NIM (%) | ~7% | ~6.9% | ~6.8% |
| Gross NPA (%) | 0.94% | 1.08% | 1.08% |
| Net NPA (%) | 0.67% | 0.73% | 0.73% |
Healthy? Yes. Sexy? Not exactly — but dependably attractive.
10. P&L Breakdown – Show Me the Money
| Year | Revenue (Cr) | Interest Cost (Cr) | Opex (Cr) | Net Profit (Cr) |
|---|---|---|---|---|
| FY22 | 1304 | 478 | 349 | 357 |
| FY24 | 2018 | 828 | 535 | 491 |
| FY25 | 2355 | 1007 | 582 | 574 |
Margins have squeezed a bit, but Aavas still holds strong.
11. Peer Comparison
| Company | P/E | ROE (%) | NIM (%) | GNPA (%) | CMP / BV |
|---|---|---|---|---|---|
| Aavas | 26x | 14.1 | ~6.8 | 1.08 | 3.47 |
| Aptus | 22.7 | 18.6 | 8.5 | 1.2 | 3.95 |
| Home First | 38.1 | 16.5 | 8.2 | 1.6 | 5.04 |
| LIC Housing Fin | 6.4 | 16.0 | 3.5 | 4.3 | 0.96 |
Aavas is like the iPhone of the group — premium, sleek, and loyal customer base — but comes at a steep price.
12. Miscellaneous – Shareholding, Promoters
| Holder | FY22 | FY24 | FY25 |
|---|---|---|---|
| Promoters | 39.1% | 26.5% | 26.5% |
| FIIs | 39.0% | 35.9% | 29.7% |
| DIIs | 10.2% | 24.4% | 10.8% |
| Public | 11.6% | 13.3% | 33.1% |
Promoters are bailing (why tho?). Retail is jumping in. FII interest declining = possible overhang.
13. EduInvesting Verdict™
Aavas is the poster child of disciplined housing finance — tight NPAs, high growth, conservative underwriting, and a clear rural moat.
But…
- No dividends
- Promoter exit
- Expensive vs peers
This is one of those stocks that may not moon but will quietly compound in the background like your SIP. If India’s housing dream lives on, Aavas will be the financier behind many of them.
Metadata
– Written by EduInvesting | 17 July 2025
– Tags: Aavas, Housing Finance, NBFC, Rural Lending, Affordable Housing
