AAVAS saw a weak quarter as NIM was 18bps below PLe while disbursals were 11% lower to PLe. However, PAT (in-line) was cushioned by softer opex (ESOP reversal) and provisions. Credit flow was hit due to extended monsoon and LMS shutdown while NIM was weaker owing to slower yield re-pricing. Company reiterated its guidance of achieving AuM growth of ~20% YoY in FY25, as disbursals revived in September and October. Cost control is driving opex efficiency and opex to asset ratio is guided to improve by 20-30bps for FY25. Due to weak credit flow in H1FY25, NII was muted; hence, for FY25/26E we trim AuM growth by 3%/2% to 17%/18% YoY and cut NIM by 35/17bps which would be partly offset by opex reduction of ~9%.
OutlookStock is valued at 2.6x; we slightly trim multiple to 2.9x from 3.0x but our TP increases to Rs1,900 from Rs1,875 as we roll forward to Sep’26 ABV. Retain ‘ACCUMULATE’.
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