Best in class performance at Aavas Financiers with low NPA yet steadily rising loan book make it attractive despite premium valuations

Voltas’ underlying long term fundamentals are good and should be able to ride through present challenges
August 28, 2021
Action Construction is in a sweet spot with decent pick up in construction activity post Covid pandemic; but valuations are fair
September 7, 2021

AAVAS provides housing loan to low and middle income segments in semi-urban and rural areas. These are credit worthy customers that lack financial inclusion because of underdeveloped banking facilities or due to lack of documents hence are excluded by other mortgage companies. The company has large potential for growth as its market is still under-penetrated and provides a large footprint to expand geographically. AAVAS is confident that with its extensive knowledge and understanding of the housing finance business, it can organically scale up its size. The stock trades at premium valuations, but we have an over weight rating due to its strong business model which as withstood the crisis in the NBFC sector with very low NPAs. Geographic concentration in Rajasthan and Maharashtra is a concern area but management is expanding into other states – 27-08-2021 Price: 2441.60 Rating: Over Weight Recommendation: Buy

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