Aavas Financiers - Taking The Less Trodden Path To Sustainable Earnings Growth: Nirmal Bang Initiates Coverage
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Nirmal Bang Report
Aavas Financiers Ltd., a pure-play affordable housing finance company, has grown its earnings per share and book value per share by 35% and 42% compound annual growth rate, respectively over FY16-21, led by a differentiated expansion strategy, which focuses on steady scale-up in four to five states at a given point in time.
Going forward, we expect earnings/book value growth to continue on a strong trajectory, led by 22% compound annual growth rate in assets under management and improving operational efficiency even though margins may compress.
Besides gaining scale benefits, Aavas Financiers is expected to benefit from improving cost of funds, which should enhance the company’s pricing power and make it more competitive.
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