Aavas Financier jumps 5% on Societe Generale picking up stake in it

Shares of Aavas Financier jumped 5 percent in early trade on June 27, a day after European private equity firm Societe Generale picked up a 0.5 percent stake in the company.

Societe Generale bought 3.96 lakh shares or a 0.5 percent stake of Aavas Financiers at an average price of Rs 1,427.21 per share through open market transactions on June 26.

The stake bought by Societe Generale was a part of the larger holding sold by another foreign portfolio investor, Small Cap World Fund Inc.

At 10.38am, shares of Aavas Financiers were trading at Rs 1,519.35, up 3.84 percent, on the National Stock Exchange.

On June 26, Small Cap World Fund had offloaded 7.7 lakh equity shares or 0.97 percent stake in the housing finance company at an average price of Rs 1,437.74 per share. The foreign institutional investor made Rs 110.77 crore from the stake sale.

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So far in June, Small Cap World Fund has sold 3.5 percent stake in the non-bank finance company. It held a 2.99 percent in Aavas Financier as per the company’s shareholding data as on March 31.

Brokerage firm JM Financial initiated coverage on the company with a ‘buy’ call, assigning a target price of Rs 1,840. The broking firm attributed the NBFC’s healthy capitalisation levels, improving opex (operational expenditure) profile and strong track record as reasons behind the bullish outlook.

“Current stock valuations suggest discounted valuation, considering its granular loan book, consistent efforts to improve efficiency, long growth runway and best-in-class asset quality,” JM Financial stated in its report. The firm also believes the company’s expansion into newer states would ensure continued growth momentum, with an expected asset under management CAGR (Compounded Annual Growth Rate) of 25 percent over FY23-25.

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