Shares of non-banking financial company (NBFC) AAVAS Financiers have been on an uptrend of late. However, PL Capital believes the stock is ready for an uptrend. On 16 September, the brokerage firm upgraded the stock to a ‘buy’ from an ‘accumulate’, with a target price of ₹1,685, implying a 33% upside potential from the stock's previous session (15 September) close of ₹1,269.
PL Capital has turned positive about the stock after meeting the housing finance company's (HFC) management.
AAVAS Financiers share price trend
AAVAS Financiers shares are down 12% year-to-date (YTD). However, on a shorter timeframe of six months, it is up 13%.
The stock has shed 23% over the last year, hitting a 52-week low of ₹1,050.25 on 30 March this year and a 52-week high of ₹1,774.95 on 13 November last year.
PL Capital says buy AAVAS Financiers stock
PL Capital attended AAVAS Financiers’ management meet. According to the brokerage firm, the company's management focused on technology and analytics in the meeting, highlighting its scalable technology architecture and increasing use of AI across the lending lifecycle.
"A platform has been designed to support multi-fold growth without the need for major tech changes and operates largely on a pay-per-use model, limiting the need for incremental opex as the business scales," said PL Capital.
"AI/analytics initiatives are already showing benefits through lower TAT, higher FTR and pre-delinquency identification, while the management remains focused on improving productivity. Technology remains a key enabler of operating leverage for AAVAS, with further benefits likely from AI-led underwriting, collections, cross-sell and pricing initiatives," PL Capital said.
AAVAS Financiers financial performance
According to the company's annual report, its revenue grew by 13.8% to ₹2,684.8 crore in FY26 on the back of a wider customer base and strong customer relationships.
Its net profit grew by 14.2% to ₹654.9 crore, while net total income grew by 17.7% to ₹1,579.7 crore in FY26.
The company's assets under management (AUM) grew 15% to ₹23,451 crore, and disbursements rose 11% to ₹6,775 crore.
Net interest margin (NIM) expanded 29 basis points year-on-year to 7.93%, return on assets was stable at 3.29%, and return on equity at 13.93%.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of the brokerage firm, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
