Buy Aavas Financiers, target price Rs 2205: ICICI Securities

ICICI Securities has buy call on Aavas Financiers with a target price of Rs 2205. The current market price of Aavas Financiers Ltd. is Rs 1796.3.

Aavas Financiers Ltd., incorporated in the year 2011, is a Mid Cap company (having a market cap of Rs 13974.08 Crore) operating in NBFC sector.

Financials
For the quarter ended 31-12-2020, the company reported a Consolidated sales of Rs 309.98 Crore, up 14.62 % from last quarter Sales of Rs 270.43 Crore and up 29.50 % from last year same quarter Sales of Rs 239.36 Crore Company reported net profit after tax of Rs 85.46 Crore in latest quarter.

Investment Rationale
Aavas trades at 4.6x FY23E P/BV – not inexpensive, but premium is likely to expand with greater confidence emerging. Maintain BUY with a revised target price of Rs2,205 (earlier: Rs1,650) now assigning 5.5x multiple to FY23E book. Key risks: 1) stress unfolding higher than anticipated levels; 2) rising competition can weigh on yields.

Promoter/FII Holdings
Promoters held 50.2 per cent stake in the company as of Dec 30, 2020, while FIIs held 32.5 per cent, DIIs 7.9 per cent and public and others 9.4 per cent.