Aavas Financiers Reports Strong Q3FY26 Performance with 16% Net Profit Growth
Aavas Financiers reported strong Q3FY26 results with 16% YoY net profit growth to Rs 1.70 billion and AUM reaching Rs 222 billion. The company maintained excellent asset quality with 1+ DPD improving to 3.80% and successfully raised Rs 975 crores from a multilateral institution. Management targets 25%+ disbursement growth for FY27 supported by digital channel expansion and branch network enhancement.
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Aavas Financiers delivered strong financial performance in Q3FY26, demonstrating resilient growth amid a challenging operating environment. The housing finance company reported significant improvements across key metrics while maintaining its focus on quality-led growth and prudent risk management.
Financial Performance Highlights
The company's financial results for Q3FY26 showcased robust performance across multiple parameters:
| Metric | Q3FY26 | Growth (YoY) |
|---|---|---|
| Net Profit | Rs 1.70 bn | +16% |
| Net Interest Income | - | +17% |
| AUM | Rs 222 bn | +15% |
| Net Worth | - | +16% |
| ROA | 3.43% | +6 bps |
| ROE | 14.29% | +8 bps |
The company's balance sheet crossed the Rs 20,000 crores milestone during the quarter, marking an important achievement in its growth journey. Net Interest Margins expanded by 27 basis points year-on-year to 8.01%, supported by improved spreads and continued focus on risk-adjusted pricing.
Asset Quality and Risk Management
Aavas Financiers maintained its industry-leading asset quality standards with significant improvements across key metrics:
| Parameter | Q3FY26 | Sequential Change |
|---|---|---|
| 1+ DPD | 3.80% | -19 bps |
| GNPA | 1.19% | -5 bps |
| Net Stage 3 | 0.79% | - |
| Credit Costs | 16 bps | - |
The improvement in 1+ DPD was notable, with the metric falling well below the 5% threshold and showing consistent enhancement across geographies. The company's disciplined underwriting standards and proactive risk management framework contributed to maintaining credit costs at 16 basis points.
Operational Efficiency and Strategic Initiatives
The company demonstrated improved operational efficiency with the Opex-to-Assets ratio improving by 7 basis points sequentially to 3.44%. The Cost-to-Income ratio continued its downward trend, declining by 75 basis points sequentially to 42.9%.
During the quarter, Aavas rolled out a comprehensive Branch Excellence Program comprising five key projects:
- Project Neev: Strengthening pre-login discipline and frontline effectiveness
- Project Nipun: Institutionalizing post-login rigor and approval quality
- Project Sampoon: Driving "first-time-right" culture
- Project Setu: Optimizing channel management through digital integration
- Project RISE: Strengthening employee engagement and career pathways
Funding and Liquidity Position
The company successfully raised approximately Rs 975 crores from a marquee Multilateral Financial Institution during the quarter, representing the largest NCD placement in the company's history. This funding will support affordable housing loans for EWS and LIG households while promoting women homeownership and green-certified housing.
| Funding Metrics | Details |
|---|---|
| Total Outstanding Borrowings | Rs 193 bn |
| Cost of Funds Improvement | -16 bps (sequential), -56 bps (YoY) |
| External Benchmark Linked | 35% |
| Sub-3-month MCLR Linked | 34% |
| Available Liquidity | Rs 19.55 bn |
Growth Outlook and Strategic Direction
Management expressed confidence in achieving 25%+ disbursement growth in FY27, targeting an additional Rs 2,000 crores in disbursements. The growth strategy encompasses multiple drivers including digital channel expansion, branch network enhancement, and productivity improvements.
The company plans to add approximately 50 branches in FY27, building on its current network of 410 branches. Digital channels like CSC and eMitra are expected to contribute significantly to growth momentum, with management projecting these channels to add around Rs 500 crores in business.
With over 2,800 customers already benefiting from government subsidy schemes under PMAY 2.0, receiving subsidies worth more than Rs 90 million, Aavas remains well-positioned to capitalize on supportive government initiatives and favorable macroeconomic conditions in the affordable housing segment.
Historical Stock Returns for Aavas Financiers
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.11% | -7.87% | -9.72% | -23.62% | -22.15% | -44.66% |
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