Aavas Financiers Limited

Sachinder Bhinder

Managing Director and Chief Executive Officer

Ghanshyam Rawat

Chief Financial Officer

Ashutosh Atre

Chief Risk Officer

Rakesh Shinde

Head of Investor Relations

36%

ew disbursement recognition framework in Q1, operations have now normalized, resulting in a strong 36% QoQ and 21% year-on-year growth in disbursements during Q2. Our sanction-to- disbursement ratio,

21%

nt recognition framework in Q1, operations have now normalized, resulting in a strong 36% QoQ and 21% year-on-year growth in disbursements during Q2. Our sanction-to- disbursement ratio, which was imp

80%

2. Our sanction-to- disbursement ratio, which was impacted in Q1, has recovered and now stands at ~80%, demonstrating improved conversion efficiency. Entering the second half of the year—traditionally

16%

d by sound underwriting principles rather than any perceived weakness in demand. Our AUM grew by 16% year-on-year to Rs. 213.6 billion. Given the current momentum and positive market environment, we

Rs. 213.6 billion

ing principles rather than any perceived weakness in demand. Our AUM grew by 16% year-on-year to Rs. 213.6 billion. Given the current momentum and positive market environment, we now anticipate full-year AUM grow

18%

urrent momentum and positive market environment, we now anticipate full-year AUM growth of around 18%. The broader macroeconomic backdrop remains supportive – the government’s continued thrust on reta

Rs. 75 million

as customers have already benefited from these schemes, receiving subsidies amounting to more than Rs. 75 million. As we look ahead, our long-term strategic priorities remain clear—to fully leverage our strong

Rs. 200

. With that preamble, I will now take you through our quarterly performance. After crossing the Rs. 200 bn milestone earlier this year our AUM has now reached Rs 214 bn. During Q2 FY25, we disbursed lo

Rs 214

ly performance. After crossing the Rs. 200 bn milestone earlier this year our AUM has now reached Rs 214 bn. During Q2 FY25, we disbursed loans worth Rs 15.6 bn, registering a 36% sequential and 21% yea

Rs 15.6

ne earlier this year our AUM has now reached Rs 214 bn. During Q2 FY25, we disbursed loans worth Rs 15.6 bn, registering a 36% sequential and 21% year-on-year growth, while maintaining our strong focus on

11%

strong focus on quality origination and prudent underwriting. Our Net profit for Q2 FY26 grew by 11% YoY to Rs 1.64 bn led by robust 18% YoY growth in NII on account of healthy improvement in spread.

Rs 1.64

s on quality origination and prudent underwriting. Our Net profit for Q2 FY26 grew by 11% YoY to Rs 1.64 bn led by robust 18% YoY growth in NII on account of healthy improvement in spread. Our Net Worth c

“There will be an opportunity for you to ask questions after the presentation concludes.”

“revision As highlighted during our last quarter’s commentary, we are pleased to share that we have made our entry into Tamil Nadu with opening of eight new branches, and we plan to add another eight in H2, taking our network to 405 branches across 14 states.”

“Entering the second half of the year—traditionally a strong period for us—we expect this momentum to sustain and further strengthen.”

“Given the current momentum and positive market environment, we now anticipate full-year AUM growth of around 18%.”

“During Q2 FY25, we disbursed loans worth Rs 15.6 bn, registering a 36% sequential and 21% year-on-year growth, while maintaining our strong focus on quality origination and prudent underwriting.”

“Our Net profit for Q2 FY26 grew by 11% YoY to Rs 1.64 bn led by robust 18% YoY growth in NII on account of healthy improvement in spread.”

“This improvement was supported by significant improvement in spread coupled with our continued focus on risk-adjusted pricing, which resulted in a 10-bps increase in incremental business yields over H1 FY25.”

“We continue to maintain our guidance of keeping credit costs below 25 bps on a sustainable basis.”

“Our spread improved sharply by 34 bps year-on-year to 5.23% in Q2, while the calculated spread increased by 59 bps year-on-year to 6.27% in Q2 FY26.”

“Profitability and Capital Position, our Net Total Income (NIM) in absolute terms grew by 18% YoY in Q2 FY26.”

Sachinder Bhinder

19

Ghanshyam Rawat

13

Mona Khetan

9

Moderator

6

Rakesh Shinde

4

Kunal Shah

4

Renish Bhuva

3

Shreepal Doshi

3

Nischint Chawathe

2

Ashutosh Atre

1

Rakesh Shinde

Ladies and gentlemen, good day, and welcome to the Aavas Financiers Ltd H1 and Q2FY26 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in a listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star, then zero on your touchtone phone. Please note, this conference is being recorded. I now hand the conference over to Mr. Rakesh Shinde, Head Investor Relations of Aavas Financiers Limited. Thank you, and over to you, sir. Thank you. Good evening, everyone. I extend a very warm welcome to all participants and thank you for joining

Sachinder Bhinder

Thank you, Rakesh. A good evening to all. I thank you for joining us on this earning call. I hope you had a joyous Diwali and have a prosperous Samvat 2082. I am pleased to share that CARE Ratings has revised its long-term rating outlook on Aavas from ‘Stable’ to ‘Positive’. This represents an important step toward a potential rating upgrade to AA+, which will further enhance our ability to diversify liability profile in a cost-efficient manner. The outlook reflects Aavas’ strong fundamentals—quality growth, robust asset quality, sustained profitability, a solid capital position, and stability of our management team. revision As highlighted during our last quarter’s commentary, we are pleased to share that we have made our entry into Tamil Nadu with opening of eight new branches, and we plan to add another eight in H2, taking our network to 405 branches across 14 states. We will continue to expand in a contiguous, cluster-based manner, adding 20–25 branches in H2 to deepen penetration

Ghanshyam Rawat

Thank you, Sachinder ji. Good evening, everyone, and a warm welcome to our earnings call. To provide update on borrowings first, our ability to improve the cost of funds continues to underscore the strength and resilience of Aavas’ well-diversified liability franchise. In line with our strategy of innovation in liability sourcing, we proactively anticipated a potential softening in interest rates and strategically shifted a sizeable portion of our borrowings to EBLR-linked instruments and shorter-tenure MCLR structures. This forward-looking approach has continued to yield tangible benefits in Q2, as our liabilities are repricing faster than those of many peers. This positions us well to maintain a competitive cost of funds while supporting sustainable quality growth. As a result, we have seen an additional 17 bps improvement sequentially in our cost of funds led by EBLR-linked borrowings and other borrowings. Our spread improved sharply by 34 bps year-on-year to 5.23% in Q2, while the

Ashutosh Atre

Thank you, Ghanshyam Ji. Good evening, everyone. I am pleased to share the key portfolio risk parameters with you. Asset Quality & Provisioning, Aavas is strongly positioned to continue delivering industry-leading asset quality. Our asset quality remains within the guided range with 1 day past due well below 5% at 3.99% in Q2FY26 and Gross Stage 3 & Net Stage 3 under 1.25% stood at 1.24% and 0.84%, respectively. From a geographic perspective, asset quality in our home state continues to remain healthy. The average 1+ DPD and GNPA stood well below 4% and 1.25% of AUM. Similarly, in our emerging markets, we are observing healthy credit performance, with 1+ DPD and GNPA levels remaining comfortably within 3.5% and 1% of AUM, respectively. Our total ECL provisioning, including that for COVID-19 impact as well as Resolution Framework 2.0, stood at Rs. 1.21 bn as of 30th Sept 2025.

Sachinder Bhinder

Our disciplined underwriting standards, coupled with a proactive risk management framework, have enabled us to stay ahead of emerging macroeconomic challenges. While several peers have reported asset quality pressures due to sectoral or regional headwinds, our portfolio has remained resilient. We continue to follow a rigorous credit assessment process, stress-tested across multiple economic scenarios, and remain selectively calibrated in our exposure to higher-risk segments. This approach has helped us preserve asset quality, which continues to rank among the best in the industry. With this, I open the floor for Q&A. Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Renish from ICICI. Please go ahead. Hi Sir, congratulations on a good set of numbers. My first question is on basically yields? So, while our spread expanded for the last 2 quarters, but this is largely driven by cost of fund benefit and yield continues to fall. S

Renish Bhuva

So, basically, let us say, till September-25, whatever benefit we got on the borrowing side, let us say, there is no further benefit on the cost of borrowing, we will keep PLR where it is currently. Is that the fair presumption?