AAVAS Financiers

AAVAS Financiers reported a strong Q4 FY26, with net profit growing 18% year-on-year to ₹1.82 billion. Net Interest Income (NII) also saw a robust 17% Y-o-Y growth. The company's Asset Under Management (AUM) reached ₹234.5 billion by the end of FY26, marking a 15% Y-o-Y increase, while total disbursements for the year grew 11% to ₹67.8 billion.

The company demonstrated significant margin expansion, with Net Interest Margins (NIMs) expanding by 44 basis points sequentially to 8.45% in Q4 FY26, and an overall expansion of 29 bps for the full fiscal year. This contributed to an improvement in Return on Assets (ROA) by 13 bps to 3.5% and Return on Equity (ROE) by 38 bps quarter-on-quarter to 14.67% in Q4. The spread for FY26 improved by 31 bps Y-o-Y to 5.20%.

AAVAS maintained pristine asset quality, with 1+ DPD (Days Past Due) improving by 63 bps sequentially to 3.17% as of March 2026. Gross Non-Performing Assets (GNPA) also improved by 14 bps quarter-on-quarter to 1.05%. Credit costs improved by 13 bps, and the company reiterated its guidance to keep credit costs below 25 bps on a sustainable basis. Total ECL provisioning stood at ₹1.3 billion as of March 31, 2026.

The company added 31 branches in Q4, bringing its total network to 435 branches across 15 states, with expansion concentrated in focused growth markets like Tamil Nadu, Uttar Pradesh, and Gujarat. Management aims for 20%+ AUM growth long-term, focusing on sharp execution, enhancing operating efficiency, and leveraging its distribution network and local market knowledge. The net worth crossed ₹50 billion, and the Capital to Risk-Weighted Assets Ratio (CAR) stood at a healthy 44.6%.

AAVAS successfully secured commitments of approximately ₹975 crores (USD 108 million) from a multinational financial institution and issued ₹500 million of AAA-rated PTCs for the first time. The company's outstanding borrowing stood at ₹204 billion, with ₹67.05 billion raised in FY26 at a competitive rate of 7.61%. Ample liquidity is maintained, including ₹19 billion in unavailed cash credit limits and ₹9.75 billion in documented unavailed sanctions.

While operating expenses were higher year-on-year due to investments in branch expansion and ESOP/PSOP schemes, management expects the Opex to AUM ratio to improve, targeting below 3% in the 2-3 year platform and 2.75% once the balance sheet doubles. The company acknowledged flat total loan disbursements and declining home loan volumes in FY26 as an area of immediate attention, with a focus on improving productivity per person and per branch.