AAVAS - Fundamental Analysis: Financial Health & Valuation

📊 Financial Overview: AAVAS Financiers demonstrates solid financial fundamentals for a housing finance company. It has a ROE of 14.1% and ROCE of 10.1%, indicating efficient capital deployment. The debt-to-equity ratio of 3.19 is typical for NBFCs, reflecting a leveraged but manageable structure. EPS stands at ₹74.2, and the company posted a quarterly PAT of ₹139 Cr, slightly down from ₹154 Cr, but still showing a positive YoY profit variance of 10.4%.

💰 Valuation Metrics: The stock trades at a P/E of 22.3, slightly above the industry average of 19.3, suggesting fair valuation. The P/B ratio is ~3.0 (₹1,655 / ₹551), and the PEG ratio of 1.30 indicates reasonable pricing relative to growth. Dividend yield is 0%, which is common for growth-focused financial institutions reinvesting profits.

🏢 Business Model & Competitive Edge: AAVAS focuses on affordable housing loans, primarily targeting underserved segments in semi-urban and rural India. Its tech-enabled underwriting, strong branch network, and prudent risk management offer scalability and resilience. The company benefits from low delinquency rates and consistent loan book growth, though rising cost of funds and competition remain key risks.

📉 Entry Zone: A favorable entry zone lies between ₹1,520–₹1,600, near the 52-week low and below DMA 200, offering better valuation comfort.

📈 Long-Term Holding Guidance: AAVAS is suitable for long-term investors seeking exposure to India’s affordable housing and financial inclusion themes. Accumulate on dips and monitor asset quality, cost of funds, and regulatory developments.