Aavas Financiers conducted a conference call 02 February 2024 to discuss the financial results for the quarter ended December 2023. Sachinder Bhinder, MD&CEO of the company addressed the call:

Highlights:

The focus of the government on housing and proposal to build 2 crore houses Augurs well for mission and vision of the company.

Under Aavas 3.0 strategy, the company aims to be the most trusted affordable housing finance company in the country led by people, process and technology.

Investment in technology expected to deliver sustainable growth for the company. Digital transformation journey of the company is progressing well which is equally adopted among the employees.

The company is expecting the major business transformation to be completed in next 3 to 4 months.

The company has recorded Rs 1362 crore disbursements in Q3FY2024 recording 8% qoq and 13% yoy growth.

The companies is witnessing month on month improvement in the disbursements. The disbursements have jumped more than 20% for January 2024 over January 2023 and gives confident to be in a position to grow disbursement in line with the guidance for Q4FY2024

Growth at growth in AUM at 23% end December 2023 is inline with the guidance of 20-25% growth.

As a per company, it is witnessing a healthy growth across all geographies with strong growth in the Uttar Pradesh, Karnataka and Maharashtra.

The company has added 5 branches in the current financial year and it has expanded into the new states of Karnataka which would help to grow in the adjacent state of South India which has a good growth potential.

The company is well in position to grow its AUM at 20-25% across cycles, while expect to double AUM in next 3 years.

The company has continued to maintain spreads above 5%.

The opex to asset ratio has moderated by 30 bps to 3.49% in Q3FY2024 from 3.79% in Q3FY2023. The tech transformation is expected to lead to an improvement in the efficiency and the company aims to reduce opex to asset ratio in gradual manner to 3%.

The asset quality remains stable, while the credit cost continues to be below 25 bps.

The assets and liabilities are well diversified. The company as higher tenure of liabilities than assets.

The cost of borrowing is peaking out. Incremental cost of borrowing has declined in Q3FY2024.

About 47% of the borrowings were through loans, 22% from assignment, 18.8% from NHB refinancing and 10% from the debt capital market.