1. At a Glance
Aavas Financiers Ltd (Aavas) is basically that neighbourhood moneylender who ditched the bicycle, put on a suit, hired Salesforce, and went IPO. With a loan book of nearly ₹18,400 Cr, 372 branches across 14 states, and average loan ticket sizes of ₹14 lakh, the company has become a darling of semi-urban housing finance. But here’s the kicker: while growth is solid (20%+ AUM CAGR), promoter holding is pledged to the tune of 54%. Yes, more than half. Imagine pawning half your jewellery to open more jewellery shops.
2. Introduction
Affordable housing finance is India’s great Bharat Jugaad. On one side, you have HDFC Ltd (RIP, now merged) financing corporate honchos’ South Bombay sea-view flats. On the other, you have Aavas handing loans to self-employed kirana shop owners who want to build two rooms with a tin roof. That’s the niche — risky, profitable, but operationally a nightmare.
The magic trick? Aavas maintains a NIM of ~7.6% and ROA of ~3.3%. These numbers are better than many large HFCs. Their average loan ticket size has crept up from ₹10.8 lakh in FY22 to ₹13.8 lakh in FY25 — indicating borrowers are slowly upgrading from “ek chhota ghar” to “ek thoda bada ghar.”
But behind the rosy AUM growth (₹11,350 Cr in FY22 → ₹18,395 Cr in FY25), lurk some serious concerns: rising cost of funds (6.9% → 8.1%), GNPA inching up (0.99% → 1.08%), and promoter exit drama (Kedaara + Partners Group selling to CVC Capital). Add to this, negative investor returns in last 3 years (-10%), and suddenly, the housing story looks more like a soap opera.
3. Business Model (WTF Do They Even Do?)
Aavas specializes in retail housing finance for low and mid-income self-employed borrowers in semi-urban India. Translation: They lend to the tailor, shopkeeper, and small businessman who don’t have salary slips but do have cash flow.
Product Categories:
- Home Loans (69% of AUM): Purchase/construction of houses.
- Non-Home Loans (31%): Loans against property, MSME loans.
USP:
- High-yield segment (NIM 7.5%+).
- Quick TAT (8 days vs 10 earlier).
- Deep semi-urban presence (Rajasthan, MP, Maharashtra, Gujarat dominate).
How they make
