AAVAS - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 3.4

Let’s decode the financial narrative behind Aavas Financiers Ltd. (AAVAS) — a niche NBFC operating in the affordable housing segment with decent growth under the hood but elevated risks too.

🧮 Core Financial Health

Profitability Metrics

ROE: 13.9% and ROCE: 9.91% show moderate efficiency, but not stellar for its high valuation.

EPS: ₹62.0 indicates decent earnings power at the current market price.

Qtr Profit Var: +12.3% and sequential PAT improvement (₹117 Cr to ₹142 Cr) reflect upward momentum.

Debt Profile

Debt-to-equity: 3.29 — very high. Standard for NBFCs, but riskier in a tightening rate cycle.

Dividend Yield: 0.00% — signals a growth-first approach, common for companies reinvesting profits.

💸 Valuation Lens

Metric Value Takeaway

P/E Ratio 28.4 Above industry average (20.0) — pricey

P/B Ratio ~3.69 With Book Value ₹477 — fair for premium housing financiers

PEG Ratio 1.47 Slightly above 1 — signals moderate overvaluation

Intrinsic Value ❌ Below CMP Suggests caution before entering

🧱 Business Model & Edge

Aavas is a specialized home loan provider, catering to low-income segments in Tier-2/3 regions.

Its strong credit underwriting practices and granular geographic diversification are core strengths.

DII holding up +0.77% shows domestic institutions remain confident in long-term execution.

FII inflow of +0.10% is steady but not exuberant — cautious optimism?

📉 Technical Pulse

RSI: 34.0 — near oversold levels. Could be ripe for a technical bounce.

MACD: -22.9 — bearish divergence, trend still weak.

Price is below both DMA 50 & 200 — signals short-term downtrend.

52W Range ₹1,603–₹2,238, current price is at the lower band — aligns with potential accumulation zone.

🎯 Suggested Entry Zone & Holding Strategy

Entry Zone: ₹1,625–₹1,695 — attractive for long-term investors seeking quality in corrections.

Hold for

Rural credit expansion tailwinds

Low default rates and healthy loan book growth

Policy support for affordable housing

Long-term compounding potential (but watch debt levels)

Looking to build a broader housing finance basket with players like Home First or Repco? I’d love to help map out a diversified strategy that balances risk and return 🏡📈.

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