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Informist, Friday, Nov. 7, 2025

By Janwee Prajapati

MUMBAI – Aavas Financiers Ltd. is expected to have delivered a steady performance for the September quarter, supported by strong growth in revenue and better loan quality. Margins are likely to remain stable while lower credit costs and reduced provisions are expected to boost the company's profit, brokerages said. The company will announce its quarterly earnings Tuesday.

The company's net profit for the September quarter is estimated at INR 1.50 billion, up a mere 1% on year, according to the average of estimates from eight brokerages. The net profit is likely to increase by over 7% on quarter. The highest estimate for the September quarter net profit is INR 1.62 billion from Elara Securities (India) Pvt. Ltd., while the lowest estimate is INR 1.34 billion from Prabhudas Lilladher Pvt. Ltd.

The company's net interest income is expected to grow by double digits, helped by lower credit cost and a stable loan book. The company is expected to report a net interest income of INR 3.16 billion, up almost 14% from the trailing quarter and up 31% from the corresponding quarter last year. YES Securities (India) Ltd. expects the highest net interest income at INR 3.72 billion, while the lowest estimate of INR 2.65 billion is from Prabhudas Lilladher.

The company's margins are expected to remain in a narrow range, as most housing loans are linked to floating rates, according to JM Financial Institutional Securities. While most brokerages see the company's margins holding steady, Kotak Securities expects a slight improvement in the company's net interest margin, driven by a marginal decline in funding costs.

The company's disbursements are expected to gain momentum in the September quarter, with brokerages projecting double-digit growth. Motilal Oswal estimates a 21% year-on-year rise, while JM Financial forecasts a 24% increase. However, operating costs are likely to remain high due to ongoing branch expansion, with the total branch count reaching 397 as of June 30.  "Operating expenses will stay elevated due to rapid expansion of the footprint, leading to a cost-to-AAUM (average assets under management) ratio of 3.2% (compared with 3.0–3.4% over the previous four quarters)," Kotak Securities said.

Asset quality of the housing finance company is likely to be healthy, with a minor improvement expected. Prabhudas Lilladher forecasts gross non-performing assets to fall 6 bps to 1.16%, while Elara Securities and Motilal Oswal expect credit costs to stay steady.

At 1122 IST on Friday, shares of Aavas Financiers were trading 1.2% lower at INR 1,586 on the National Stock Exchange. The stock has fallen nearly 6% since the company detailed its June-quarter results. Investors will keep an eye on management commentary on loan growth, margins and credit costs when the housing financier releases its September quarter results.

Out of 13 brokerage reports on the company available with Informist eight have a 'buy' rating on the stock with an average target price of INR 2,015, three have a "hold" rating, while the other two have a "sell" rating. 

The following are the Jul-Sept earnings estimates for Aavas Financiers from eight brokerages in descending order of the estimate of net profit in INR million:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Deepshikha Bhardwaj

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