Aavas Financiers gains 3% after FPI offloads 7.08 lakh shares

Shares of Aavas Financiers Ltd jumped 3 percent in early trade today after Small Cap World Fund Inc offloaded 7.08 lakh equity shares of the company.

At 9:55am, the Aavas Financiers stock was trading 2.31 percent higher at Rs 1,385 on the NSE.

Foreign portfolio investor Small Cap World Fund Inc sold off 7.08 lakh equity shares, or 0.9 percent equity stake in the Jaipur-based housing finance company, late on June 16.

These shares were sold at an average price of Rs 1,350.02 per unit and were worth Rs 95.71 crore. Small Cap World Fund held 7.99 percent stake or 63.18 lakh shares in the company as of March 2023.

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Brokerage Commentary

Prabhudas Lilladher has given a ‘hold’ rating on Aavas Financiers with a target price of Rs 1,560.

“Aavas at its analyst meet showcased its ‘Vision 3.0’ which would mainly focus on scalability & standardization while governance, asset quality, profitability and growth, in that order, would remain priorities,” it said.

“Key takeaway was that company wants grow consistently with a runway of 10-15 years given large potential in affordable housing coupled with its capabilities in underwriting and technology/analytics.”

While the management did try to allay stakeholder concerns over the stability in the company’s top deck, it is imperative that all CXOs be with the company for long term. Promoters clarified again that they do not intend to sell any stake in the near term.

Outlook

“We remain watchful as execution and mid-level retention are a key. We maintain our multiple at 3.0x FY25E ABV and TP at Rs1,560. Retain hold,” Prabhudas Lilladher said.

Stock Performance

Aavas Financiers has lost 30.17 percent of its value over the last six months. Thus, considerably underperforming the benchmark Nifty50 index which has given a return of 2.28 percent over the same duration.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol  advises users to check with certified experts before taking any investment decisions.