Aavas margin rebounds, but stock falls -5.11% after Q1FY27 results
Standalone profit rose +23.01% YoY, while a 7.01% QoQ increase in interest expense pulled profit below the previous quarter.
Filed 21 Jul 2026, 19:12 IST · after market close · AAVAS Financiers Ltd (AAVAS)
Key takeaways
- Standalone net profit rose +23.01% YoY to Rs 171.27 cr as revenue grew faster than expenses.
- Operating margin improved 1.65 percentage points QoQ to 73.85% after falling to 72.20% in Q4FY26.
- The stock fell -5.11% on the first session after results, almost twice the 2.58% median absolute move after the past eight results.
Price around the results
Profit growth outpaced revenue in the standalone quarter
Aavas Financiers reported standalone revenue growth of +12.93% YoY, while expenses rose +10.23%, helping operating profit grow +13.92%. Profit before tax increased +22.87% and net profit rose +23.01% to Rs 171.27 cr. Other income contributed only 0.17% of pre-tax profit, so reported earnings were not materially supported by non-operating income.
Lower costs lifted margin, but interest rose QoQ
Revenue declined -0.83% QoQ, but expenses fell faster at -6.72%, expanding operating margin by 1.65 percentage points. Interest expense increased +7.01% QoQ, while the tax rate rose 0.92 percentage points, which pulled profit before tax down -4.62% and net profit down -5.72% from Q4FY26. Year on year, the tax rate was broadly stable, down 0.08 percentage points.
Margin recovered from Q4, but remains below the FY26 peak
Operating margin had increased from 73.21% in Q1FY26 to 74.52% in Q2FY26 and 74.83% in Q3FY26 before dropping to 72.20% in Q4FY26; Q1FY27 marked a recovery to 73.85%. The margin was 16.26 percentage points above the 57.59% median for 128 Financial Services peers that had reported the same quarter.
Management points to branch expansion and faster AUM additions
Management said the branch network had expanded to 440 locations and that monthly AUM additions improved by nearly +50% YoY during the quarter. The company told investors it aims to drive AUM growth to the high-teens. It also said cumulative funding of green homes had exceeded 700 under its sustainable housing commitment.
Post-result fall was unusually large for Aavas
The stock fell -5.11% on the first session after the results and was down -8.83% after five sessions, with first-day volume at 5.79 times its reference level. This was a larger move than the 2.58% median absolute reaction across the past eight results, six of which were negative and two positive.
Q1FY27 at a glance
Standalone figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹709 cr | ₹715 cr | -0.83% | +12.93% |
| Other income | ₹0 cr | ₹0 cr | +153.33% | +2.70% |
| Expenses | ₹185 cr | ₹199 cr | -6.72% | +10.23% |
| Operating profit | ₹523 cr | ₹516 cr | +1.43% | +13.92% |
| Operating margin (%) | 73.85% | 72.20% | — | — |
| Interest | ₹293 cr | ₹273 cr | +7.01% | +7.84% |
| Depreciation | ₹11 cr | ₹12 cr | -7.53% | +18.31% |
| Profit before tax | ₹220 cr | ₹231 cr | -4.62% | +22.87% |
| Tax | ₹49 cr | ₹49 cr | -0.51% | +22.41% |
| Net profit | ₹171 cr | ₹182 cr | -5.72% | +23.01% |
| EPS (₹) | ₹21.60 | ₹22.94 | -5.84% | +22.80% |
Operating margin of 73.85% compares with a Financial Services sector median of 57.59% across 128 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -5.11% | -4.31% |
| Next session | -8.92% | — |
| 5 sessions | -8.83% | -9.09% |
| 15 sessions | -6.93% | — |
| 30 sessions | -17.28% | — |
Volume on the results session was 5.79× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Monthly AUM additions improved by nearly 50% year on year during the quarter.
Guidance & outlook
- The company aims to drive AUM growth to the high-teens.
Expansion
- The company expanded its network to 440 branch locations.
New initiatives
- The company has cumulatively funded more than 700 green homes as part of its sustainable housing commitment.
What to watch
- Whether standalone operating margin holds above 73.85% after the Q1FY27 recovery.
- Whether interest expense growth moderates from +7.01% QoQ.
- Whether monthly AUM additions sustain the nearly +50% YoY improvement cited by management.