Conference Call with Aavas Financiers Management and Analysts on Q2FY26 Performance and Outlook. Listen to the full earnings transcript.
Housing Finance company Aavas Financiers announced Q2FY26 results Assets under Management (AuM) of the company registered a growth of 16% to reach Rs 213.6 billion as on 30-Sep-25. Disbursements during Q2FY26 grew by 21% YoY and 36% QoQ at Rs 15.6 billion. Our Net profit for H1FY26 and Q2FY26 grew by 11% YoY to Rs 3.03 billion and 1.64 billion respectively, led by robust growth in Net Interest Income. Our spread during the quarter expanded by 34 bps YoY to 5.23% driven by our cost of borrowing improving by 30 bps YoY to 7.85%. Our NIM in absolute terms increased by 18% YoY in Q2FY26, while NIM as a percentage of total assets during Q2FY26 stood at 8.04% up 56 bps QoQ. Our Opex-to-Assets ratio saw a marginal increase of 5 bps sequentially to 3.51%, while the Costto-Income ratio declined by 262 bps quarter-on-quarterto 43.7%, reflecting improved efficiency gains. Our asset quality remains pristine, with 1+ DPD below 5%, improving by 16 bps sequentially to 3.99% as of September 2025, while GNPA levels remained stable at 1.24%. Credit costs improved sharply by 8 bps sequentially to 16 bps. driven by lower 1+ DPD flow and improvement in Stage 2 buckets. We continue to maintain our guidance of keeping credit costs below 25 bps on a sustainable basis. In terms of the borrowing mix, 50% of our borrowings are from Term Loans, 25% is from Assignment, 14% from NHB Refinancing; 11% is from debt capital market (of which 53% is from development finance institutions like IFC, CDC & ADB) and 1% from Cash Credit and CPs. Our Net Worth continues to compound steadily, growing at 16% YoY, with the strength of our capital position driven by consistently compounding internal accruals. Our ROA improved significantly by 46 bps sequentially to 3.40% and ROE improving by 175 bps QoQ to 14.31%. We added 8 branches during the quarter, taking the total number of branches stands at 405 as on 30 th Sep 2025. Sachinder Bhinder, Managing Director & Chief Executive Officer, said: “Dear All, At Aavas, we are committed to serving unserved, underserved, and underbanked customers in Tier 2 to Tier 5 markets by developing tailored financial solutions. Our focus on achieving riskadjusted returns underscores our dedication to fostering housing affordability and creating sustainable value in these communities. This period, we recorded a strong 36% QoQ growth in disbursement, reflecting sustained and broad-based demand for housing in our segment. Our sanction-to-disbursement ratio has now normalized and is now ~80%, indicating improved conversion efficiency. Our strategic priorities remain centered on optimizing both yield and credit quality. During the H1FY26, we achieved a 10-bps improvement in yields over H1 FY25, supported by targeted initiatives to enhance our portfolio mix and pricing discipline. Further, our proactive liability management has helped reduce our cost of borrowing by 17 bps QoQ, enabling us to deliver a healthy spread above 5%, at 5.23%. Following the successful completion of our technological transformation, we have begun to realize measurable improvements. As of Sep 2025, the turnaround time from login to sanction has been reduced to 6 days, a significant enhancement from the earlier peak of 13 days. Our paper usage has been cut by 59% and have rolled out digital agreements in 223 branches. Aligned with our strategy of contiguous growth, we added 8 new branches, all in Tamil Nadu, taking our footprint to 405 branches across 14 states. Aavas remains well-capitalised with a CRAR of 46.4% as of September 2025. Our strong underwriting standards and tech-enabled collection efforts have enabled us to preserve the pristine asset quality of the portfolio. As of Sep 2025, the 1+ days past due metric stands at 3.99%, while Gross Stage 3 remains contained at 1.24%. Strategic Priorities: Disciplined growth in core affordable housing markets (Tiers 2–5), contiguous-state expansion. Portfolio mix optimisation to support yield and asset quality. Continued digitisation across sourcing, underwriting, disbursement, and collections. Prudent liability management to protect spreads and liquidity.” Result PDF
Housing Finance company Aavas Financiers announced Q1FY26 results Assets under Management (AuM) of the company registered a growth of 16% to reach 207.4 billion as on 30 June 2025. Disbursements during Q1FY26 stood at Rs 11.5 billion, factoring a one-time impact of transitioning to a realisation basis disbursement recognition model. Our Net profit for Q1FY26 grew by 10% YoY to Rs 1.39 billion, led by a robust 14% YoY growth in Net Interest Income. Opex to Assets ratio saw a decline of 25 bps QoQ in Q1FY26 at 3.46%, whereas on a YoY basis, there is an increase of 19 bps on account of the increase in ESOP costs. Our spread during the quarter expanded by 22 bps sequentially to 5.11% as AuM yield remained stable at 13.13% and our cost of borrowing declined to 8.02%. Our NIM in absolute terms has increased by 16% YoY in Q1FY26, while NIM as a percentage of total assets during Q1FY26 stood at 7.48% up 17 bps YoY. Our asset quality continues to be pristine, within the guided range, with 1+ DPD well below 5% at 4.15% in Q1FY25, and Gross Stage 3 & Net Stage 3 stood at 1.22% and 0.84% respectively. Credit cost during Q1FY26 was 24 bps impacted by seasonality. In terms of the borrowing mix, 49% of our borrowings are from Term Loans, 25% from Assignment, 14% from NHB Refinancing, 11% from the debt capital market. Net Worth grew by 16% YoY to Rs. 45.1 billion as on 30 June 2025. ROA stood at 2.94% and ROE stood at 12.56% in Q1FY26. The total number of branches stands at 397 as on 30 June 2025. Sachinder Bhinder, Managing Director & Chief Executive Officer, said: “Dear All, Q1FY26 was a landmark quarter for Aavas, marking a pivotal moment in our journey. We successfully concluded the change in promoter process and are proud to welcome CVC Capital Partners as our new promoter. The trust and conviction shown by CVC in Aavas is a strong testament to the strength of our franchise and the vast opportunity in the affordable housing finance sector in India. Their global perspective, institutional depth, and strategic insight position Aavas to accelerate into its next phase of growth and innovation. I would like to take this opportunity to express my sincere gratitude to the visionary leadership of our former promoters, Kedaara Capital and Partners Group. Under their stewardship, what began as an ambitious proof of concept has grown into a scalable institution—one that has transformed lives and made affordable homeownership a reality for thousands of families. This quarter also marks a significant milestone in our commitment to governance, transparency and putting the customer at the centre of everything we do. We’ve taken a historic step by transitioning to a realisation-based model for disbursement recognition - a forward-looking and conservative approach that reflects our intent to stay one step ahead, aligning not just with regulatory expectations, but with their true spirit. Our strategic focus remains on optimising yield and credit quality. We achieved a 35 bps YoY improvement in yield this quarter, driven by targeted initiatives to optimise mix and pricing. Further, our proactive liability management has helped reduce our cost of borrowings by 22 bps QoQ, enabling us to deliver a healthy spread above 5%, at 5.11%. Aavas maintains a well-diversified liability franchise supported by prudent cash flow management. As of June 2025, we remain well-capitalised with a Capital to Risk (Weighted) Assets Ratio (CRAR) of 43.2%. Following the successful completion of our technological transformation, we have begun to realise measurable improvements. As of June 2025, the turnaround time from login to sanction has been reduced to 6 days, a significant enhancement from the earlier peak of 13 days. Our paper usage has been cut by 59% and we have rolled out digital agreements in 120 branches. Aligned with our strategy of contiguous growth, we continue to expand our footprint in both core and emerging markets. Our branch network now spans 397 branches across 14 states. Our strong underwriting standards and tech-enabled collection efforts have enabled us to preserve the pristine asset quality of the portfolio. As of June 2025, the 1+ days past due metric stands at 4.15%, while Gross Stage 3 remains contained at 1.22%, reflecting the portfolio’s overall health. Government initiatives such as the Interest Subsidy Scheme (ISS) under PMAY 2.0, combined with a supportive interest rate environment, continue to bolster homebuyer sentiment and improve affordability. I’m pleased to report that over 450 Aavas customers have benefited from these schemes, receiving subsidies totalling more than Rs 15 million. We also want to acknowledge the NHB for its continued leadership in promoting transparency, governance, inclusion, diversity, and capability-building in the sector. We’re proud to share that Aavas has won the “Product Innovation” award at NHB’s inaugural Housing Finance Excellence Awards 2025. Our firm commitment to Governance, Asset Quality, Profitability, and Growth remains paramount. By harnessing advanced technology and delivering exceptional customer experiences, we are confident in a bright future. Our strategic initiatives are poised to drive sustainable growth and maximise shareholder value.” Result PDF