Aavas Financiers reported a robust set of results for Q4FY26 and the full financial year ended March 31, 2026, during its earnings conference call held on May 05, 2026. The company's net profit for Q4 grew 18% to Rs. 1.82 billion, driven by a 17% YoY growth in net interest income (NII) and healthy improvement in net interest margins (NIMs). FY26 emerged as a year of significant milestones, including a change of promoters welcoming CVC Capital Partners, the balance sheet crossing Rs. 200 billion, net worth crossing Rs. 50 billion, and lifetime disbursements surpassing the Rs. 400 billion mark, enabling 4 lakh customers to achieve homeownership.

Key Financial Performance

The company's financial metrics for Q4FY26 and FY26 reflected broad-based improvement across profitability, margins, and capital adequacy. The following table summarises the key financial highlights:

NIMs improved by 29 bps overall in FY26, supported by improvement in spread and a continuous focus on risk-adjusted pricing. ROA improved by 13 bps to 3.5%, while ROE improved by 38 bps quarter-on-quarter to 14.67% in Q4.

Asset Quality Remains Pristine

Aavas Financiers maintained industry-leading asset quality metrics during the quarter and the full year. The 1+ DPD improved sharply by 63 bps sequentially to 3.17% as of March 2026, compared to 3.38% in FY25, remaining well below the 4% guided range. GNPA improved by 14 bps QoQ to 1.05%, tracking close to historical low levels, while Net Stage 3 stood at 0.68%.

Credit costs improved to 13 bps, driven by lower 1+ flow and improvement across buckets. The management reiterated its guidance of maintaining credit costs below 25 bps on a sustainable basis. From a geographical perspective, asset quality in vintage states remained healthy with average 1+ DPD and GNPA well below 4% and 1.25% of AUM, respectively, while emerging markets also showed healthy credit performance with 1+ DPD and GNPA comfortably within 4% and 1% of AUM.

Liability Franchise and Borrowings

The company's well-diversified liability franchise continued to deliver cost efficiencies during FY26. Aavas proactively shifted a sizable portion of its borrowings to EBLR-linked instruments and various market rate benchmarks, enabling faster repricing of liabilities. This approach resulted in a 62 bps improvement in overall cost of funds for FY26. During the year, the company raised approximately Rs. 67.05 billion at a competitive rate of 7.61%, with outstanding borrowings standing at Rs. 204 billion as of March 31, 2026.

A landmark NCD placement of approximately Rs. 975 crores (USD 108 million) was secured from a marquee multinational financial institution at a competitive cost — the largest NCD placement in the company's history. The proceeds are earmarked for affordable housing loans to EWS and LIG categories, promoting women ownership, scaling green-certified housing, and expanding MSME lending in underserved regions. Additionally, the company successfully issued approximately Rs. 500 million of AAA-rated PTC for the first time in its history.

Network Expansion and Strategic Priorities

Aavas Financiers added 31 branches during Q4FY26, bringing its total network to 435 branches across 15 states. The expansion was largely concentrated in high-potential growth markets such as Tamil Nadu, Uttar Pradesh, and Gujarat. The company's credit rating outlook was upgraded to positive by both ICRA and CARE during FY26, reflecting stakeholder confidence in its quality-led growth strategy.

Management outlined the following strategic priorities for the next phase of growth:

• Targeting consistent 20%+ AUM growth to outperform the industry
• Deepening presence in high-potential states including Maharashtra, Gujarat, Uttar Pradesh, and Southern markets
• Improving per-person productivity and disbursements per sales officer
• Rebuilding direct sourcing muscle through branch-driven channels, CSC, digital platforms, and referral programmes
• Optimising risk-adjusted pricing across 435 branches without compromising asset quality
• Targeting opex to AUM ratio below 3% on a 2-to-3-year horizon, with a long-term steady-state target of approximately 2.75% at double the current balance sheet size
• Leveraging technology investments including Salesforce, Oracle FLEXCUBE, Oracle ERP Fusion, and incremental AI/GenAI applications for underwriting, acquisition, and collections

Management Commentary

Manu Singh, Managing Director and CEO (subject to RBI approval), addressing participants for the first time in his role, emphasised the company's credit-first and customer-first philosophy. He highlighted that yield improvement through risk-adjusted pricing does not imply movement into riskier customer segments, reiterating the management's commitment to maintaining credit cost guidance below 25 bps. On the macroeconomic environment, Singh noted that the cumulative 125 basis point repo rate cut by RBI has improved affordability, creating strong tailwinds for the affordable housing segment. The CRO, Ashutosh Atre, confirmed that as of the call date, no adverse trends in bounce rates or delinquencies had been observed in April, with bounce rates in April lower than the previous month and better than April of the prior year, even as the management maintained close monitoring of select customer profiles that could potentially be impacted by global macroeconomic developments.

Aavas Financiers Limited has declared its audited financial results for the quarter and financial year ended March 31, 2026. The Board of Directors, in its meeting held on May 05, 2026, approved the financial results, which were reviewed by the Audit Committee and audited by M/s. M S K A & Associates LLP and M/s. Borkar & Muzumdar, Chartered Accountants. The company reported strong growth across key metrics, with Assets under Management (AUM) rising 15% year-on-year to Rs. 234.5 bn and net profit for FY26 growing 14% YoY to Rs. 6,556 mn. The year was also marked by a change of promoter welcoming CVC Capital Partners, the balance sheet crossing Rs. 200 billion, and lifetime disbursements surpassing the Rs. 400 billion mark, enabling over 4 lakh customers to realise their home ownership aspirations.

Financial Performance

For the financial year ended March 31, 2026, Aavas Financiers reported a total income of Rs. 2,68,483.48 lakh, compared to Rs. 2,35,841.50 lakh in the previous year. Net profit rose to Rs. 65,488.13 lakh from Rs. 57,410.82 lakh in the prior year. Basic earnings per share (EPS) increased to Rs. 82.72 from Rs. 72.54 in the previous year, while diluted EPS stood at Rs. 82.14 compared to Rs. 71.97 previously. The Net Total Income (NIM) for FY26 stood at Rs. 15,797 mn, up 17.7% YoY, driven by a 14.7% rise in interest income on loans to Rs. 23,409.4 mn. Operating expenses for FY26 were Rs. 7,055.4 mn, while credit costs stood at Rs. 337.2 mn. The following table presents the annual financial highlights:

For the quarter ended March 31, 2026, the company recorded a total income of Rs. 71,483.24 lakh and a net profit of Rs. 18,166.80 lakh, compared to a net profit of Rs. 15,367.92 lakh in the same quarter of the previous year. Q4FY26 revenue stood at Rs. 7.15B versus Rs. 6.36B in Q4FY25, while net profit rose to Rs. 1.82B from Rs. 1.54B YoY. Q4FY26 Profit Before Tax stood at Rs. 23,076.11 lakh, up from Rs. 19,322.38 lakh in Q4FY25. Basic EPS for Q4FY26 was Rs. 22.94 and diluted EPS was Rs. 22.78, compared to Rs. 19.42 and Rs. 19.26 respectively in Q4FY25.

Key Operational Metrics

The company delivered robust operational performance across quarters. Net Interest Income (NII) grew 17% YoY in Q4FY26, while Net Interest Margin (NIM) as a percentage of total assets expanded by 44 bps quarter-on-quarter to 8.45% in Q4FY26 and by 29 bps for the full year FY26 to 7.93%. Disbursements for FY26 stood at Rs. 67,751 mn, registering 11% YoY growth, while Q4FY26 disbursements of Rs. 23,481 mn reflected 16% YoY and 36% sequential growth. The cost-to-income ratio remained stable at 45.9% in Q4FY26. The spread improved by 31 bps to 5.20% for FY26, supported by a 62-bps reduction in cost of funds. The following table summarises the key performance metrics:

Balance Sheet and ECL Provisions

The company's balance sheet expanded to Rs. 2,12,125.0 mn as of March 31, 2026, from Rs. 1,86,184.7 mn a year earlier. Total assets stood at Rs. 21,21,250.09 lakh as at March 31, 2026, compared to Rs. 18,61,847.40 lakh in the prior year. Loan assets grew to Rs. 18,37,269.47 lakh from Rs. 16,22,970.93 lakh, while debt securities and borrowings together increased to Rs. 15,59,220.90 lakh from Rs. 13,84,986.44 lakh. Equity share capital stood at Rs. 7,928.27 lakh and other equity at Rs. 4,97,156.28 lakh, taking total equity to Rs. 5,05,084.55 lakh. On the ECL provisioning front, gross loan principal outstanding as of March 31, 2026, stood at Rs. 1,85,023 mn, with Stage 3 assets at 1.05% of the portfolio. Total ECL provisions amounted to Rs. 1,296 mn, representing an overall provision coverage of 0.70%. The following table presents the ECL provisioning summary:

Asset Quality and Capital Adequacy

Asset quality remained strong, with Gross Non-Performing Assets (GNPA) at 1.05% as of March 31, 2026, improving 14 bps sequentially. Net Non-Performing Assets (NNPA) stood at 0.68%, while the 1+ days past due (DPD) metric improved 63 bps sequentially to 3.17%, remaining among the lowest in the industry. Credit costs improved to 13 bps for Q4FY26 and stood at 17 bps for FY26, driven by lower 1+ DPD flow and improvement across buckets. The provision coverage ratio stood at 66.91%. The Capital Risk Adequacy Ratio (CRAR) was reported at 44.56%, and the Liquidity Coverage Ratio stood at 147.71% for the year ended March 31, 2026, while the Q4FY26 Liquidity Coverage Ratio was 167.90%. The debt-equity ratio stood at 3.09 and total debts to total assets at 0.74. Net Worth grew 16% YoY to Rs. 50,508 mn, crossing the Rs. 50 bn mark, driven by consistently compounding internal accruals. The company's total liquidity position as of March 31, 2026, stood at Rs. 28,750 mn, comprising cash and cash equivalents of Rs. 17,990 mn and un-availed cash credit limits of Rs. 1,010 mn, in addition to documented and un-availed sanctions from banks of Rs. 9,750 mn. The following table presents key regulatory and financial ratios:

Cash Flow Highlights

For the year ended March 31, 2026, Aavas Financiers reported net cash used in operating activities of Rs. 1,38,641.62 lakh, compared to Rs. 1,66,012.62 lakh in the prior year, reflecting higher disbursements. Net cash used in investing activities was Rs. 11,653.93 lakh, while net cash from financing activities was Rs. 1,72,020.99 lakh, driven by proceeds from borrowings of Rs. 5,24,851.58 lakh against repayments of Rs. 3,50,422.59 lakh. Cash and cash equivalents at the end of the year stood at Rs. 22,856.74 lakh, up significantly from Rs. 1,131.30 lakh at the start of the year. Interest received during the year was Rs. 2,29,264.51 lakh, while interest paid was Rs. 1,05,921.33 lakh.

Loan Transfer and Securitisation Disclosures

During the year ended March 31, 2026, Aavas Financiers transferred 18,582 loan accounts through assignment with a total value of INR 1,86,350 lakh, with a weighted average maturity of 130 months and a minimum retention requirement (MRR) of 10%. For the quarter ended March 31, 2026, 5,754 loan accounts were assigned amounting to INR 52,115 lakh. Additionally, 1,463 loan accounts were transferred through co-lending during the year, amounting to INR 24,995 lakh, with a weighted average maturity of 215 months and an MRR of 20%. The company confirmed that no stressed loans were transferred or acquired during the quarter and year ended March 31, 2026. The following table summarises loan transfer activity:

Board Decisions and Corporate Actions

During the meeting, the Board approved an overall limit of Rs. 9,000 crore for the Executive Committee to offer, issue, and allot Non-convertible Debentures (NCDs) through private placement, subject to shareholder approval. The Board also decided to decrease the AFL Prime Lending Rate (PLR) by 10 basis points, effective from June 05, 2026. Mr. Sandeep Tandon was re-appointed as the Chairperson of the Board of Directors, effective from the conclusion of the 16th Annual General Meeting until the conclusion of the 17th Annual General Meeting. On the funding front, the company secured a commitment of approximately Rs. 9.8 bn from the Asian Development Bank (ADB) and approximately Rs. 5.0 bn through AAA-rated PTC securities, with the average tenor of outstanding borrowings at 130 months as of March 2026. The credit rating outlook was also upgraded to Positive by CARE and ICRA. Regarding NCD utilisation, NCDs raised via private placement on October 29, 2024, amounting to Rs. 630 crore, were utilised with no deviation from the stated objects.

Expansion, Sustainability, and CEO Commentary

During Q4FY26, Aavas Financiers added 31 branches, taking its total network to 435 branches across 15 states, with expansion concentrated in Tamil Nadu, Uttar Pradesh, and Gujarat. The company employed 7,649 people and covered 2,500+ towns, with over 80% of branches in Tier 3 and beyond locations. On the sustainability front, the company added 300+ certified Green Homes during FY26, bringing the cumulative total to 650+. The historical financial snapshot reflects a five-year CAGR of 20% in AUM and 21% in disbursements, with Profit After Tax growing at an 18% CAGR over the same period.

Commenting on the performance, Mr. Manu Singh, Chief Executive Officer, said: "FY26 was a year of landmarks and milestones. Our AUM at the end of FY26 stood at Rs. 234.5 billion, registering a YoY growth of 15%, while disbursements for the full year were Rs. 67.8 billion with 11% growth YoY. Our strong underwriting standards and tech-enabled collection efforts have enabled us to preserve and further the pristine asset quality of the portfolio. As we look ahead, our long-term strategic priorities remain clear — to fully leverage our strong digital platforms, distribution network, further strengthen governance, drive scale efficiently, optimize costs, and enhance productivity across the organization."