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Informist, Wednesday, Apr. 23, 2025

By Vaishali Tyagi

MUMBAI – Strong growth in disbursements coupled with a fall in expenses is expected to boost the Jan-Mar bottom line of Aavas Financiers Ltd., according to brokerages tracking the company. The housing financier is seen reporting a net profit of INR 1.54 billion for the quarter, up 8.2% on year and 5.4% on quarter, according to the average of estimates from 11 broking firms.

Estimates of net profit were in the range of INR 1.29 billion-INR 1.63 billion. The company's net profit for the December quarter had risen 25.5% on year to INR 1.46 billion. Total revenue from operations for Oct-Dec had risen 17.5% to INR 5.97 billion.

The company is scheduled to announce its quarterly earnings Thursday. Shares of the company have risen over 27% since it declared its earnings for Oct-Dec at the end of January. On Wednesday, shares of the housing finance company closed at INR 2,119.40, down 4.6% on the National Stock Exchange.

"We expect Aavas's disbursements to grow 5% on year to INR 20 billion in Jan-Mar, leading to 6.6% on-quarter and 18% on-year asset under management growth," Kotak Institutional Equities said in its report. During Oct-Dec, the company's disbursements had grown 17% on year to INR 15.94 billion.

The company's net interest income is also expected to grow, albeit at a slower pace than assets under management, brokerages said. The company's interest income for Oct-Dec had risen 19.0% on year to INR 5.19 billion. Elara Capital expects growth in net interest income to remain robust in Jan-Mar. According to the average of estimates from 11 brokerages, the company's net interest income is expected to be INR 2.89 billion for the March quarter.

On the company's margin, the brokerages were divided. Motilal Oswal Financial Services estimates a slight decline in margin due to increased borrowing costs. While the brokerage expects the margin to contract by 10 basis points on a sequential basis, Elara Capital expects the margin to improve slightly. According to the company's own investor presentation, the net interest margin was 7.54% for the nine months ended December.

Equirus Securities expects a decline in expenses following the completion of the company's technology implementation, with a cost-to-income ratio of 44.0%. For the December quarter, the company's operating expenses had risen 6.8% on year to INR 1.40 billion.

The asset quality of Aavas Financiers is expected to remain stable, with Motilal Oswal estimating a minor improvement in quality indicators. The company is expected to sustain a growth rate of 6.0-7.0% on a quarterly basis, driven by strong demand in the affordable housing segment, Nirmal Bang Equities said.

Following are the Jan-Mar earnings estimates for Aavas Financiers from 11 brokerages, in descending order of net profit:

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Edited by Rajeev Pai

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