Check Before You Invest : Aavas Financiers Ltd

Q: Which industry/sub-sector does Aavas Financiers Ltd belong to?

Aavas Financiers Ltd belongs to the BFSI sector, operating specifically within the Finance - Housing segment.

Q: Is Aavas Financiers Ltd a good quality company?

Aavas Financiers Ltd is a good quality company, based on a consistently good multi-year financial track record. This assessment is based on the bank’s performance on Total Income growth, Pre-Provision Operating Profit, RoA, RoE, CAR, and Asset Quality, along with how these metrics compare with its long-term averages.

Q: Is Aavas Financiers Ltd undervalued or overvalued?

Aavas Financiers Ltd appears Undervalued, as its key valuation ratios are lower than their past averages. Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more. Valuation Ratios. Price to Earnings, Current: 16.57, Historic Median: 28.06. Price to Book, Current: 2.15, Historic Median: 3.74. Price to Sales, Current: 4.04, Historic Median: 7.07. EV to EBITDA, Current: 11.4, Historic Median: 15.83

Q: Is Aavas Financiers Ltd a good buy now?

Aavas Financiers Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Q: Total Income growth of Aavas Financiers Ltd?

Aavas Financiers Ltd Operating Income growth is 16.7% for FY-2025, which is below its 5-year CAGR of 21.15%, indicating slower growth.

Q: Return on Assets of Aavas Financiers Ltd?

Aavas Financiers Ltd Return on Asset is 3.3%, which is below its 5-year historical median of 3.5%, indicating deteriorated earnings on assets. Efficiency & Key Metrics. NPM (%), Current: 24.38, Historic Median: 26.24. PPOP (%), Current: 17.17, Historic Median: 17.56. RoA (%), Current: 3.3, Historic Median: 3.5

Q: Return on Equity (ROE) of Aavas Financiers Ltd?

Aavas Financiers Ltd Return on Equity is 14.3% for FY-2025, which is in line with its 5-year historical median of 14.1%, indicating the business is making similar use of its shareholders capital.

Q: Pre-provisioning operating profit margin of Aavas Financiers Ltd?

Aavas Financiers Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 17.17% for FY-2025, which is in line with its 5-year median(17.56%), indicating stable margins.

Q: Net Profit Margin of Aavas Financiers Ltd?

Aavas Financiers Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 24.38% for FY-2025, which is below its 5-year median( 26.24%), indicating decreasing margins.

Q: Does its ROIC exceed its WACC?

Aavas Financiers Ltd return on invested capital (ROIC) is 7.46% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 13.5%, indicating value erosion.

Check Before You Invest : Aavas Financiers Ltd

BSE: 541988 NSE: AAVAS ISIN: INE216P01012

| Sector: BFSI | Industry: Finance - Housing

Snapshot

Q.1 Which industry/sub-sector does Aavas Financiers Ltd belong to?

Aavas Financiers Ltd belongs to the BFSI sector, operating specifically within the Finance - Housing segment.

Q.2 Is Aavas Financiers Ltd a good quality company?

Aavas Financiers Ltd is a good quality company, based on a consistently good multi-year financial track record.

This assessment is based on the bank’s performance on Total Income growth, Pre-Provision Operating Profit, RoA, RoE, CAR, and Asset Quality, along with how these metrics compare with its long-term averages.

Q.3 Is Aavas Financiers Ltd undervalued or overvalued?

Aavas Financiers Ltd appears Undervalued, as its key valuation ratios are lower than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios	Current	5-year Historic Median
Price to Earnings	16.57	28.06
Price to Book	2.15	3.74
Price to Sales	4.04	7.07
EV to EBITDA	11.4	15.83

Q.4 Is Aavas Financiers Ltd a good buy now?

Aavas Financiers Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

How has it performed on generating Profits?
By checking its Total Income growth, NPM, PPOP, RoA and RoE compared to its last 5-year median.
How efficiently has it grown and managed operations?
By checking its Total Asset growth.
How strong is its Capital position and Asset Quality?
By checking its Capital Adequacy Ratio (CAR), GNPA and NNPA.

A: What are the trends in income and profitability?

Q.1 Total Income growth of Aavas Financiers Ltd?

Aavas Financiers Ltd Operating Income growth is 16.7% for FY-2025, which is below its 5-year CAGR of 21.15%, indicating slower growth.

Q.2 Return on Assets of Aavas Financiers Ltd?

Aavas Financiers Ltd Return on Asset is 3.3%, which is below its 5-year historical median of 3.5%, indicating deteriorated earnings on assets.

	Current Level	5-year Historic Median
NPM (%)	24.38	26.24
PPOP (%)	17.17	17.56
RoA (%)	3.3	3.5

Q.3 Return on Equity (ROE) of Aavas Financiers Ltd?

Aavas Financiers Ltd Return on Equity is 14.3% for FY-2025, which is in line with its 5-year historical median of 14.1%, indicating the business is making similar use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of Aavas Financiers Ltd?

Aavas Financiers Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 17.17% for FY-2025, which is in line with its 5-year median(17.56%), indicating stable margins.

Q.5 Net Profit Margin of Aavas Financiers Ltd?

Aavas Financiers Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 24.38% for FY-2025, which is below its 5-year median( 26.24%), indicating decreasing margins.

Q.6 Does its ROIC exceed its WACC?

Aavas Financiers Ltd return on invested capital (ROIC) is 7.46% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 13.5%, indicating value erosion.

B: Does the bank grow efficiently and manage its operating costs?

Q.7 Total Asset growth of Aavas Financiers Ltd?

Aavas Financiers Ltd Total Asset growth is 12.71% for FY-2025, which is below its 5-year CAGR of 19.45%, indicating slower growth.

C: How strong is the bank’s capital position and asset quality?

Q.8 Capital Adequacy ratio of Aavas Financiers Ltd?

Aavas Financiers Ltd Capital Adequacy ratio (CAR) is 44.5% for FY-2025, which is above the regulatory requirement of 15%, indicating strong capital position.

Q.9 Asset Quality of Aavas Financiers Ltd?

Aavas Financiers Ltd Gross Non-Performing Assets, which are loans overdue by more than 90 days, is 1.08% for FY-2025, which is above its 5-year median 0.98%, while Net Non-Performing Assets, which is GNPA minus provisions made for bad loans is 0.73% which is in line with its 5-year median( 0.71%), indicating stable asset quality.

Ownership & governance

D: Promoter shareholding and pledge status of Aavas Financiers Ltd?

Q.1 Promoter shareholding and pledge status of Aavas Financiers Ltd?

Promoters hold 48.88% of the Aavas Financiers Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Aavas Financiers Ltd performance compare with that of its Peers?

Q.1 AUM Growth of Aavas Financiers Ltd vs Industry Peers?

Aavas Financiers Ltd AUM CAGR is 19.45%, compared to the 5-year industry median CAGR of 4.02%, indicating faster growth and gaining its market share.

Q.2 Profit metrics (NPM, PPOP, RoA) of Aavas Financiers Ltd vs industry peers

Aavas Financiers Ltd profit metrics are above the industry median level of 10.39%, indicating stronger profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NPM (%)	24.38	17.47
PPOP (%)	17.17	11.85
RoA (%)	3.3	1.85

Q.3 Operating efficiency of Aavas Financiers Ltd vs industry peers?

Aavas Financiers Ltd ROCE (10) is above the industry median of (8.9); while the current ROE (14.1) are above than the 5-year average Industry ROE (12.3). This shows that the business is positioned in the top quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NPM (%)	24.38	17.47
PPOP (%)	17.17	11.85
RoA (%)	3.3	1.85
ROCE (%)	10.2	8.9
ROE (%)	14.3	12.3

Valuation & price assessment

Q.1 Stock return of Aavas Financiers Ltd over the last decade?

Over the last 5 years, the stock has delivered a CAGR of -9.57% based on the current price.

	9Y	5Y	3Y	1Y
Share Price CAGR	-	-9.6%	0.3%	-21.9%

Q.2 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	16.57	28.06	14.87
Price to Book	2.15	3.74	1.28
Price to Sales	4.04	7.07	3.57
EV to EBITDA	11.4	15.83	10.71

Q.3 Valuation ratios of Aavas Financiers Ltd vs historical and industry averages?

The current Price-to-Book (P/B) ratio of 2.15 is lower than its historical median of 3.74, indicating that the stock is trading below its historical average valuation.

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Check Before You Invest : Aavas Financiers Ltd

Snapshot

Performance Analysis

Ownership & governance

Peer comparison (industry-wise, mcap)

Profit Metrics

Operating Efficiency

Valuation & price assessment

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Check trending companies

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