Aavas Financiers Q2FY27 AUM Hits ₹248 Billion

Net Interest Income: 15% YoY growth
Net Total Income: 11% YoY growth in absolute terms
Net Interest Margin: 7.81%, expanded by 11 bps QoQ
Pre-Provisioning Operating Profit: ₹2.49 billion, representing 14% YoY growth
PAT: 10.7% YoY growth
ROA: 3.23%, improved by 4 bps YoY
ROE: 13.48%, improved by 5 bps YoY

1+ DPD: 3.81% in Q2FY27, improved by 18 bps YoY
Gross Stage 3: 1.11%, improved by 13 bps YoY
Net Stage 3: 0.70%, improved by 16 bps YoY
Repayment Rate: Normalized to ~17% in Q2 and expected to remain in similar range

RO Productivity: Improved from 1.1 files/month in Q1FY27 to 1.2 files/month in Q2FY27, reaching 1.3 files/month in September 2026
Target Productivity: Aiming for 1.5 files/month by end of FY27 and progressively scaling to 2 files/month
Revenue per RO: Improved by 29% in H1FY27
Branch Network: Expanded to 443 branches across 15 states
New Customers: Added 21,500+ new customers in H1FY27
Total Customers Served: Nearly 4.5 lakh customers

Cost of Borrowing: Stable at 7.64% despite volatile interest rate environment
Q2 Borrowings: Raised approximately ₹16.79 billion at 7.66%
Total Outstanding Borrowings: ₹216 billion as of September 30, 2026
Liquidity Position: Cash, cash equivalents, and un-availed CC limits of ₹19.6 billion, plus documented un-availed sanctions of ₹3 billion
Borrowing Mix: Approximately 30% linked to Repo rate, balance linked to MCLR and Fixed Rated Instruments
ALM Position: Average tenure of borrowings longer than assets, ensuring positive ALM across all time buckets

Company is on track to cross ₹250 billion AUM milestone during October 2026
Long-term target of achieving ₹500 billion AUM
Targeting more than 20% growth over the long term
Growth expected to be driven by: 20%+ CAGR on volumes, 8% from branches, 10% from productivity, 5%-7% from ATS

Target steady-state AUM mix: 65% Home Loans, 35% Non-Home Loans (LAP, MSME)
Conscious effort to offer data-driven top-up loans to existing customers (currently ~5% of disbursements)
Classification clarification: Lending above 60% construction stage categorized as LAP rather than HL

Comprehensive review and revamp of operating processes
Implementation of system-driven controls and reinforced maker-checker mechanisms
Rigorous training programs to embed strong governance culture
Technology serving as force multiplier combining physical distribution with digital processes

Strengthening team with experienced professionals across various levels
Revamped incentive policies focused on encouraging higher productivity slabs
Long-term incentive plan and ESOP program for approximately 200 employees
Weekend workshops with frontline teams showing improvement in active ROs and supervisors

MD & CEO Manu Singh emphasized:

Focus on sustainable profitable growth through customer-first approach
Priority on productivity, efficiency, and governance improvements
Confidence in maintaining spreads above 5% despite rising interest rate environment
Expectation that rising lending rates will support yields on incremental disbursements
No impact anticipated from drought conditions in some geographies due to limited exposure to pure Agri-based income segments
No immediate PLR changes post RBI repo rate hike, but ALCO meets monthly to review

Management believes target customer segment is different from larger NBFCs/HFCs, minimizing competitive pressure
Confidence in maintaining 5%+ spreads through risk-adjusted pricing on transaction basis

No stress anticipated from drought conditions due to limited agricultural exposure and diversified income assessment
All lead indicators showing month-on-month improvement

Target to reduce Opex Ratio to below 3% from current 3.33%
Cost-to-income ratio target below 40% in medium term
No headcount reduction agenda, focusing on right-sizing and productivity improvement

Approximately 4% of PBT currently from insurance income
Confident of mitigating regulatory impact through increased attachment percentages
Belief that insurance is appropriate product for affordable housing segment