Aavas Financiers hits highest level since Nov 2022; soars 5% in weak market

Aquilo House Pte. Ltd. has acquired 17.8 million equity shares, or 22.5 per cent stake, in Aavas Financiers pursuant to the mandatory tender offer on March 21, 2025

Shares of Aavas Financiers Limited (AFL) hit its highest level since November 2022, as they rallied 5 per cent to ₹2,047.15 on the National Stock Exchange (NSE) in Wednesday intraday trade in an otherwise weak market. In comparison, the Nifty 50 was down 0.23 per cent at 23,615.15 at 01:01 PM.

 

Thus far in the month of March 2025, the stock price of the housing finance company has surged 21 per cent. In the past one year, the stock has appreciated by 57 per cent, as against 7 per cent rise in the Nifty 50.

 

Aavas Financiers is a retail affordable housing finance company, primarily serving low-, and middle-income self-employed customers in the semi-urban and rural areas in India. The company's product offering consists of home loans for the purchase or construction of residential properties, and for the extension and repair of existing housing units, Loan Against Property (LAP), and MSME loans.  ALSO READ | Stock Market LIVE Updates: Sensex drops 550 pts to 77,450; Nifty at 23,540. 

 

 

As per disclosure made by AFL on March 25, 2025, Aquilo House Pte. Ltd. (Aquilo) has acquired 17.8 million equity shares, or 22.5 per cent stake, in the company pursuant to the mandatory tender offer on March 21, 2025. 

 

The promoter/ promoter group of AFL, i.e., Kedaara Capital and Partners Group, have entered into Share Purchase Agreements (SPAs) on August 10, 2024, to sell their entire stake in AFL to Aquilo, belonging to CVC Capital Partners group. Aquilo has also announced an open offer to the public shareholders of AFL in compliance with the Sebi Takeover regulations. 

 

Post the consummation of the SPA and the completion of the open offer, Aquilo will acquire control and shall be categorised as the promoter of AFL, replacing Kedaara Capital and Partners Group. The aforesaid transaction is subject to various regulatory and lender approvals.

 

Earlier on March 19, 2025, AFL informed that SBI Mutual Fund has reduced its stake in the company to 0.056 per cent from 9.587 per cent, as the mutual fund tendered its shares in the open offer.

 

SBI Mutual Fund, under its various schemes, has disposed of 7.544 million shares via an offer for sale and acquired 58 shares (net sale of 7.544 million shares) representing 9.53 per cent of the equity capital of AFL. The final holding of SBI Mutual Fund, under its various schemes, as at the close of business hours on March 18, 2025, was 44,129 shares, which is 0.055 per cent of the total equity capital of the company, AFL said.

 

Meanwhile, engaged in providing affordable housing finance, AFL has registered strong growth with assets under management (AUM) growing at a five-year compounded annual growth rate (CAGR) of ~22 per cent to ₹17,313 crore in FY24 from ₹4,073 crore in FY18, which rose further to ₹19,238 crore as on December 2024.  ALSO READ | HAL pops 4% on reports of receiving 1st F404-IN20 engine from GE Aerospace

 

The housing loan portfolio comprised 68.6 per cent of the total AUM while the remaining 31.4 per cent belonged to mortgage-backed non-housing portfolio, primarily MSME loans and LAP with average ticket size of ₹8 lakh as on December 31, 2024. 

 

Although the non-housing loan portfolio disbursements increased to 35.2 per cent as on December 31, 2024, it is in compliance with the Reserve Bank of India (RBI) guidelines for maintaining the minimum proportion between housing and non-housing loan at 60:40. The management aims to keep the non-housing loans at around the similar level of the total loan book in the medium-term, according to CARE Ratings.

 

The company's profitability remains healthy with slight moderation in net interest margins (NIMs) to 5.75 per cent (annualised) in 9MFY25 from 6.07 per cent in FY24 owing to rise in average cost of borrowings due to increasing interest rates scenario. Operating expenses to average assets ratio has slightly improved from 3.64 per cent in FY24 to 3.26 per cent in 9MFY25 owing to operational efficiencies from the digital infrastructure investments.

 

Going forward, CARE Ratings expects NIMs to compress further from the current levels on account of elevated interest rate scenario which is expected to lead to higher cost of borrowing and increase in gearing.