AAVAS Financiers reported a strong Q2FY26, marked by a revised ‘Positive’ long-term rating outlook from CARE Ratings. Disbursements grew 36% QoQ and 21% YoY, with AUM reaching ₹213.6 billion. The company anticipates full-year AUM growth around 18%. NIM expanded to 8.04%, and asset quality remained stable, with 1+ DPD at 3.99%. Expansion into Tamil Nadu continues with plans to reach 405 branches across 14 states.
Strong Financial Performance
AAVAS Financiers announced robust Q2FY26 results, with several key indicators showing positive momentum. Disbursements saw significant growth, increasing by 36% quarter-over-quarter and 21% year-over-year. The company’s Assets Under Management (AUM) reached ₹213.6 billion.
Positive Rating Outlook
CARE Ratings revised AAVAS Financiers’ long-term rating outlook from ‘Stable’ to ‘Positive,’ indicating confidence in the company’s strong fundamentals, including quality growth, robust asset quality, sustained profitability, a solid capital position, and stable management team.
Expansion and Growth Strategy
AAVAS Financiers is expanding its footprint, particularly in Tamil Nadu, with plans to operate 405 branches across 14 states. The company aims to deepen penetration in existing markets by adding 20-25 branches in H2. Andhra Pradesh and Telangana are targeted as future expansion opportunities.
Key Financial Metrics
Net Interest Margin (NIM) expanded by 56 bps sequentially to 8.04%. Asset quality remained strong, with 1+ DPD improving to 3.99%. Net profit for Q2FY26 grew by 11% YoY to ₹1.64 billion, driven by an 18% YoY growth in Net Interest Income (NII).
Asset Quality and Provisioning
The company maintains a cautious approach to underwriting, with asset quality remaining within the guided range. Gross Stage 3 & Net Stage 3 under 1.25% stood at 1.24% and 0.84%, respectively. Total ECL provisioning stood at ₹1.21 billion as of September 30, 2025.
Borrowings and Liabilities
Total outstanding borrowings stood at ₹186.87 billion as of September 30, 2025. The company proactively shifted a portion of borrowings to EBLR-linked instruments and shorter-tenure MCLR structures to manage interest rate fluctuations. Average tenure of borrowings continues to be longer than that of assets, ensuring a positive ALM.
Future Outlook
AAVAS Financiers anticipates full-year AUM growth of around 18%, supported by government initiatives and a conducive interest rate environment. Over 2,300 customers have benefited from schemes like the Interest Subsidy Scheme (ISS) under PMAY 2.0, receiving subsidies amounting to more than ₹75 million.
Source: BSE