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Buy AAVAS Financiers; target of Rs 3500: Prabhudas Lilladher

Prabhudas Lilladher is bullish on AAVAS Financiers has recommended buy rating on the stock with a target price of Rs 3500 in its research report dated December 02, 2021.

December 02, 2021 / 12:58 PM IST
 
 
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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.

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first published: Dec 2, 2021 12:58 pm
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