AAVAS Financiers Ltd Management Discussions

GLOBAL ECONOMY

Overview

The global economy in 2025 operated within a complex and increasingly uncertain macroeconomic environment, marked by trade restrictions, policy uncertainty and persistent geopolitical tensions. Ongoing conflicts in Eastern Europe and the Middle East, including the Russia-Ukraine war, continued to disrupt global supply chains, energy markets and investor sentiment, leading to periodic volatility in commodity prices and financial conditions. At the same time, rising tariffs, changing trade arrangements and increasing geoeconomic

Despite these headwinds, global economic activity remained resilient during the year, supported by stable labour markets, continued fiscal support and technology-led investments, particularly in artificial intelligence (AI). Economies also adapted through diversified trade routes, enhanced energy security measures and supply chain realignment, which contributed to a relatively stable recovery. As a result, global growth stood at 3.4% in 2025, compared to 3.3% in 2024.

Advanced economies recorded growth of 1.9% in 2025, supported by relatively stable labour markets, easing financial conditions and recovering demand. Meanwhile, emerging market and developing economies (EMDEs) expanded by 4.4%, driven by resilient domestic consumption, improving activity across manufacturing and services, and continued infrastructure investments in key Asian economies.

Global headline inflation moderated to 4.1% in 2025, reflecting easing supply-side pressures and the impact of earlier monetary tightening measures. However, inflation trends remained uneven across regions, with inflation remaining above target in the United States while remaining relatively subdued in several other major economies.

Global Advanced Economies

Emerging Markets and Developing Economies

*P stands for Projected

[Source: IMF World Economic Outlook April 2026]

Outlook

The global economic outlook for 2026 remains one of moderate expansion, supported by continued investment in technology, relatively supportive macroeconomic policies and improving activity in select sectors. However, the outlook remains subject to elevated uncertainty arising from conflict in West Asia, alongside trade route disruptions, energy market volatility and tighter financial conditions. While global growth is projected to ease at 3.1% in 2026, the balance of risks remains tilted to the downside, particularly if higher energy prices and weaker trade flows begin to weigh more materially on demand conditions.

Global trade volume growth is also expected to slow from 5.1% in 2025 to 2.8% in 2026, before recovering to 3.8% in 2027, reflecting the impact of weaker global demand, geopolitical uncertainties and changing trade dynamics across economies.

The United States is expected to remain a key anchor for global growth, with GDP projected to grow by 2.3% in 2026 before moderating to 2.1% in 2027. Advanced economies are likely to witness steady but moderate growth, constrained by weak external demand, fiscal pressures and cautious monetary policy settings. In contrast, EMDEs are expected to continue outperforming advanced economies, supported by domestic demand, public expenditure and structural growth opportunities, although performance may remain uneven across geographies.

The global inflation outlook remains cautious. While the broader disinflation trend is expected to continue, the recent rise in energy prices has heightened the risk of renewed inflationary pressures, particularly in advanced economies. This may lead central banks to remain more data-dependent and calibrated in their policy actions than previously anticipated. However, the ongoing conflict in West Asia, may create near-term volatility through supply chain disruptions, energy price fluctuations and currency volatility. Overall, the inflation outlook points to gradual moderation, albeit with heightened sensitivity to geopolitical developments and energy prices.

INDIAN ECONOMY

Overview

The Indian economy remained one of the fastest-growing major economies in FY 2025-26, supported by resilient domestic demand, infrastructure-led investment and policy reforms. According to the Second Advance Estimates released by the National Statistical Office (NSO), real GDP is estimated to grow

The conflict in West Asia and disruptions across global trade routes have created fresh uncertainty around energy prices, logistics and availability of critical industrial inputs. As an import-dependent economy for crude oil and intermediate goods, India remains exposed to global supply chain disruptions and commodity price volatility. However, diversified sourcing strategies, domestic manufacturing capabilities and integration with emerging markets are helping mitigate external risks and support industrial continuity.

The Governments large-scale investments, reforms and flagship initiatives, such as Make in India, Product-Linked Incentive (PLI) Schemes, have been instrumental in fostering industrial growth. The PLI scheme has attracted investments of approximately ?2.16 lakh across 14 key sectors, in line with the national goals like Atmanirbhar Bharat and Indias vision of a

$5 trillion economy.

Indias Index of Industrial Production (IIP) registered a growth of 4.1% in March 2026, supported by 4.3% growth in the Manufacturing sector and 5.5% growth in Mining activity, reflecting continued resilience in industrial and infrastructure-led economic activity.

Inflation moderated significantly during the year, with the RBI lowering its CPI inflation forecast for FY 2025-26 to 2.0%, supported by favourable supply conditions and easing food prices. In response, the RBI reduced the repo rate cumulatively to 5.25%, supporting credit availability and investment activity. Indias exports are projected to approach US$ 1 trillion in FY 2026-27, strengthened by trade agreements, manufacturing scale-up and improving export competitiveness.

Indias GDP Growth

8.2%

by 7.7% in FY 2025-26, driven by strong private consumption and investment activity. The services sector remained the key growth driver, while manufacturing witnessed continued improvement supported by Government-led production initiatives and infrastructure spending. Real GDP is estimated at ?323.12 lakh crore, reflecting growth of 7.7% over FY 2024- 25.

India continues to remain among the worlds largest economies, currently ranking as the sixth-largest economy globally in nominal GDP terms as per the IMF. Structural reforms such as GST, Production Linked Incentive (PLI) schemes, and Make in India 2.0 continue to improve formalisation, manufacturing

7.2%

Outlook

Indias GDP growth for FY26 is estimated at 7.7%, driven by the double engine of consumption and investment. It reaffirms Indias status as the fastest-growing major economy for the fourth consecutive year. The nation is expected to reach a $30-35 trillion economy by 2047, entering the league of developed nations. Structural reforms and sustained growth momentum are driving this rapid progress, while digital and physical infrastructure are also expanding significantly.

Amid persistent trade policy uncertainties, geopolitical tensions, and tighter financial conditions, Indias growth outlook remains resilient, supported by strong domestic consumption, easing inflation, and a revival in private investments. Initiatives such as Make in India 2.0 will prioritise emerging and high-growth sectors while improving the business environment. The PLI scheme continues to act as a catalyst for scaling manufacturing, boosting exports, and enhancing Indias competitiveness. Improved rural consumption, driven by moderating inflation, further bolsters this growth trajectory.

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Union Budget 2026- 27

The Union Budget 2026-27 reflects the Indian Governments focus on a growth-led fiscal strategy, while maintaining stable macroeconomy. With a targeted fiscal deficit of 4.3% of GDP and a projected nominal growth of around 10%, the budget highlights a calibrated fiscal consolidation. Indias Union Budget FY 2026-27 emphasises public investment by raising the capital expenditure (capex) outlay to a record 12.2 lakh crore. This nearly 9% increase from the previous years estimate of 11.2 lakh crore is intended to sustain economic momentum and fulfil the governments Viksit Bharat vision for a developed India. Capital expenditure is prioritised in the budget, with allocations directed towards roads, railways, ports, airports, power transmission and urban infrastructure.

The Union Budget 2026-2027 reinforces Make in India by allocating 15,541 crore to Production-Linked Incentive (PLI) schemes, aiming to make India a global manufacturing hub. Policy support for sectors like semiconductors, biopharma, and capital goods aims to improve domestic value addition, strengthen the supply chain, and reduce import dependence. The launch of initiatives such as Semiconductor Mission 2.0 and investments across industrial ecosystems are expected to accelerate Indias transition into a global manufacturing hub.

The budget continues to strengthen the banking and credit ecosystem by improving liquidity, enhancing access to finance for MSMEs, and supporting priority sectors such as affordable housing. Additionally, this budget prioritises housing and urban development through a 50% increase in Ministry allocation to 85,522 crore, focusing on PMAY-Urban, City Economic Regions (CER), and sustainable infrastructure.

INDUSTRY OVERVIEW

The Indian housing finance sector in 2025-2026 is experiencing steady growth, driven by strong demand in affordable housing and tier-2/3 cities, supported by government initiatives and rural economic recovery.

Housing Finance Sector Overview

The housing finance sector in India has emerged as a key enabler of residential demand and financial deepening, supported by rapid urbanisation, rising income levels, and policy-led incentives for affordable housing. The total housing loan portfolio for Non-Banking Financial Company (NBFCs) and housing finance companies (HFCs) reached surpassed

? 10 lakh crore mark and is estimated at ?10.7 crores as on Mar-26, reflecting a year-on-year growth of 15%, with the sector maintaining a growth trajectory of 15-17% in FY27, indicating continued credit demand across borrower segments. The sector is also benefiting from demand in semi-urban and emerging markets, supported by the expansion of lender networks and digital underwriting capabilities. Additionally, housing loans as a percentage of GDP increased from 8% in FY15 to 11% in FY25, highlighting the deepening of mortgage penetration in the economy. The housing finance market is estimated at USD

430.74 billion in 2026 and is projected to reach US$ 809.07 billion by 2031 at a 13.44% CAGR, driven by affordability, favourable demographics and continued policy support.

The housing finance sector in India remains well-diversified and competitive, with Public Sector Banks continuing to hold a dominant share in housing credit, while private sector banks leverage digital capabilities and faster turnaround times to strengthen their market position. Housing Finance Companies (HFCs), on the other hand, maintain a focused presence in niche segments such as affordable housing and self-employed borrowers. As per data from the National Housing Bank, HFCs accounted for approximately 19% of individual housing loans as of March 2025, underscoring their continued relevance in enabling last-mile credit delivery.

During 2025, the RBI reduced the policy repo rate by a cumulative 125 basis points to 5.25%, which contributed to a decline in weighted average lending rates and supported affordability. The RBI also revised priority sector lending norms to expand the eligibility of affordable housing loans, while continuing the broader harmonisation of HFC regulations with the NBFC framework through tighter prudential requirements, stronger governance expectations, enhanced fraud risk management, improved wilful defaulter treatment, and more robust supervisory and reporting architecture.

Policy support remained a key enabler for the sector, with the allocation of 35 billion to the Interest Subsidy Scheme under Pradhan Mantri Awas Yojana (PMAY) in the Union Budget 2025-26, and the launch of the second tranche of the SWAMIH fund amounting to 150 billion, aimed at facilitating the completion of approximately 1,00,000 housing units. These measures are expected to support supply-side completion and sustain credit demand over the medium term. In parallel, regulatory developments by the Reserve Bank of India remained instrumental in strengthening the housing finance ecosystem.

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Affordable Housing Finance Sector Overview

The affordable housing finance segment continues to be an important growth driver within the broader housing finance market, supported by rising urbanisation, increasing incomes, growing aspirations for home ownership and deeper lender penetration into underserved geographies. Typically characterised by housing loans with ticket sizes of up to 35 lakh, the segment remains one of the most structurally significant and underpenetrated parts of Indias mortgage market, particularly among self-employed customers and borrowers with informal income profiles. It continues to account for a meaningful share of the overall housing credit ecosystem, representing ~32% of total loan outstanding and ~73% of active loan accounts, reflecting its relevance in expanding formal access to housing finance at the mass-market level.

The segment benefits from favourable structural drivers such as urbanisation, nuclearisation of families and continued policy support through priority sector classification and targeted housing initiatives. In addition, relatively lower loan-to-value risk and prudent underwriting practices have supported portfolio stability, notwithstanding the non-standardised income characteristics of the borrower base. As economic activity strengthened and housing demand improved across markets, affordable housing credit witnessed healthy expansion through FY23 and FY24. However, growth moderated in FY25 relative to the broader housing finance market, reflecting the impact of elevated interest rates for a significant part of the year, rising property prices and a calibrated tightening of underwriting standards across lenders.

Going forward, demand for affordable housing is expected to remain steady, supported by continued urbanisation, favourable demographics and focused lender penetration into underserved customer segments. As the segment matures and expands on a larger base, growth is expected to normalise at sustainable levels, with assets under management likely to stabilise at around 20% growth by FY27.

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Government Initiatives

Government support for affordable housing remains evident through continued focus on the Pradhan Mantri Awas Yojana. In the 2026-27 Union Budget, the government has significantly increased capital allocation for the PMAY 2.0 scheme, with PMAY-Gramin (Rural) allocations rising to 54,916.70 crore, from 15,000 crore in 2016–17. Additionally, 122.06 lakh houses have been sanctioned under the two phases of the Pradhan Mantri Awas Yojana-Urban (PMAY-U), of which 96.02 lakh have been completed/delivered to the beneficiaries across the country, reflecting steady implementations. PMAY-Urban 2.0 (U 2.0) was also officially launched, aiming for

1 crore additional houses and offering interest subsidies of up to 1.80 lakh spread equally across 5 years.

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Growth Drivers

Favourable demographics, regulatory advancements and a shift towards format credit lending ensure the expansion of the Indian housing finance sector. Consequently, Indias home mortgage finance market size in 2026 is estimated at US$ 539.71 billion, and Tier-2 and Tier-3 cities recorded an 81% year-on-year growth in home loan volumes in 2025, significantly higher than the 52% growth seen in Tier-1 cities. This highlights a broader and more distributed housing finance cycle. Despite this improvement, the sector remains largely untapped compared to other economies, reflecting significant expansion opportunities.

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Additionally, several factors are expected to drive this sectors expansion:

Urbanisation: Rapid urbanisation continues to be a structural driver for housing demand in India. The share of the urban population has increased from 28% in 2001 to nearly 40% in 2021 and is projected to reach 41% by 2031, reflecting the continued migration of the population toward cities and emerging urban centres. This trend is broadening housing demand beyond metropolitan markets and supporting growth across Tier II and Tier III cities. As urbanisation deepens, the need for residential infrastructure, connectivity and organised housing finance is expected to remain strong, providing sustained momentum to the sector.

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Housing Shortfall in India: India continues to face a sizeable housing shortfall, which remains a key demand driver for the sector. The overall housing shortage is estimated at 61.5 million units in 2025 and is expected to rise to 64.0 million units by 2030, reflecting the continuedgap between housing supply and underlying demand. The shortage is particularly acute in the affordable segment, where end-user demand remains structurally strong. This persistent deficit, coupled with rising household formation and urban migration, is expected to sustain long-term demand for both housing development and housing finance solutions.

Changing Housing Preferences and Lifestyle Shifts in Housing Demand: Housing demand in India is increasingly being shaped by changing lifestyle preferences, nuclearisation of families and rising aspirations for improved living standards. Buyers are showing greater preference for ownership-led housing, better-quality homes and larger ticket sizes, particularly in Tier II and Tier III cities. The share of households living in pucca dwellings improved to 83.3% in 2018 from 74.6% in 2012, while the average ticket size in housing finance has also moved up over time, reflecting this quality shift. These evolving preferences are expected to continue supporting structural demand across the housing market.

Government Policy for Affordable Housing: Government policy continues to play an important role in supporting affordable housing demand and improving credit access. Initiatives such as PMAY-U and PMAY-G, priority sector lending norms for housing, GST rationalisation and stamp duty concessions for specific buyer categories have strengthened affordability and expanded formal access to home ownership. PMAY 2.0 also targets 30 million houses during 2024–2029, while revised priority sector lending limits have improved eligibility for affordable housing loans. These measures, together with regulatory support and refinance mechanisms, are expected to remain important enablers for the affordable housing ecosystem.

Rising Disposable Income: Rising disposable income remains a key driver of housing demand, as improving household earnings enhance affordability, loan eligibility and the ability to purchase homes at an earlier stage of the life cycle. Further, with policy measures such as the relief of Income Tax to taxpayers and the 8 th Pay Commission add to available disposable income. Indias per capita net national income has continued to improve, and the number of middle-income households is expected to rise sharply to 181 million by FY2030. This expanding middle-income base is expected to support home ownership demand across both affordable and mid-income categories, while also deepening mortgage penetration over the medium term.

Infrastructure Development: Infrastructure development continues to be a major catalyst for housing demand by improving connectivity, opening new residential corridors and enhancing the attractiveness of peripheral and emerging locations. In parallel, programmes such as the Smart Cities Mission, AMRUT and investments in digital and physical infrastructure are improving urban mobility and access to services. These developments are expected to support residential absorption and expand the addressable market for housing finance.

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COMPANY OVERVIEW

Aavas Financiers Ltd. (Aavas) is a well-recognised affordable housing finance company in India, primarily focused on extending affordable housing loans to low-and middle-income customers in semi-urban and rural areas. The Company has developed strong expertise in serving underserved segments across 13 states and 2 union territories. As of March 31 st , 2026, Aavas operated through an extensive network of 435 branches and managed assets under management (AUM) of 23,452 crore.

Aavas remains a key player in advancing financial inclusion in the affordable housing segment, offering a diversified range of housing finance solutions, including loans for home construction, purchase, and renovation. Backed by a technology-led framework and a customer-centric approach, facilitates the Company to deliver quick TAT and a hassle-free borrowing experience.

With a strong presence in underserved rural and semi-urban markets, alongside a disciplined focus on asset quality, the Company has demonstrated consistent financial performance. Aavas is well-positioned to benefit from the growth in Indias affordable housing sector, supported by government initiatives and ongoing urbanisation.

Aavas has built a differentiated franchise focused on self-employed, new-to-credit and new-to-mortgage customers across rural and semi-urban markets, where formal mortgage penetration remains relatively low. Approximately 60-65% of the Companys customer base comprises self-employed borrowers, reflecting its deep underwriting capabilities and specialised understanding of informal income assessment. Cumulatively till FY 2025-2026, the Company served over 4,05,000 families, reinforcing its commitment to financial inclusion and affordable home ownership across underserved rural and semi-urban markets.

SCOT ANALYSIS

Strengths

Understanding of Niche Market: Aavas deep domain expertise in underserved semi-urban and rural markets creates a sustainable competitive moat, driving superior customer acquisition, consistent underwriting outcomes and durable franchise-led growth.

Institutionalised Underwriting Capabilities: The Company has built a strong risk management framework with dedicated teams for underwriting, property valuation, legal checks and operational risk management. Supported by experienced professionals such as chartered accountants, civil engineers and legal experts, Aavas is able to effectively assess self-employed and informal income customers while maintaining strong asset quality and disciplined lending practices.

Pristine Asset Ouality: Supported by a strong underwriting framework, deep domain expertise, advanced data analytics and efficient collections, Aavas consistently delivers best-in-class, industry-leading asset quality across credit cycles, even amid adverse environments.

Strong Capital Adequacy: Aavas maintains a healthy Capital to Risk (Weighted) Asset Ratio (CRAR), reflecting its financial resilience while supporting sustainable growth. Aavas has demonstrated strong capital efficiency by scaling its franchise nearly six times since its IPO without raising additional equity capital after FY18. This reflects the Companys prudent capital allocation, consistent profitability and disciplined balance sheet management.

Direct Sourcing and Vertical Organisation Structure: Aavas direct customer sourcing model enables better assessment of borrower intent and generation of granular insights across customer cohorts. Further, the vertically aligned organisational structure ensures independence in credit evaluation, thereby mitigating collusion risk and reinforcing underwriting discipline.

Technological Advancement: The Company has executed a comprehensive technology transformation to strengthen governance, compliance and transparency akin to banks through the implementation of CBS like Oracle FLEXCUBE, while upgrades to the Loan Origination and CRM system via the Salesforce platform support scalable and efficient business growth.

Prudent Asset-Liability Management (ALM): Aavas has a well-diversified liability franchise, with our average borrowing tenor being longer than asset maturity, ensuring a positive asset-liability profile across all time buckets.

Diversified Liability Franchise: Aavas maintains a well-diversified borrowing mix across PSU banks, private banks, development financial institutions, mutual funds, insurance companies and securitisation markets. This diversified liability profile supports strong liquidity, competitive borrowing costs and access to long-tenor funding.

Challenges

Changing Interest Rate: The Companys performance remains sensitive to interest rate volatility and evolving market conditions that may influence borrowing costs and funding dynamics; however, these risks are mitigated through a diversified funding mix, longer-tenor borrowings, active ALM management, prudent liquidity buffers and calibrated repricing strategies.

Macroeconomic Exposure: Adverse movements in key macroeconomic indicators, including elevated inflation and erosion in purchasing power, may impact customer affordability and influence loan demand; however, these risks are mitigated through prudent customer selection, conservative loan-to-value ratios, product affordability filters and calibrated credit underwriting.

Opportunities

Expanding into Southern India: Aavas is expanding its presence in the southern region, which represents a meaningful whitespace opportunity. Building on the operational experience in Karnataka and a contiguous expansion strategy, Aavas has extended its footprint into Tamil Nadu with 20 branches in FY26 and plans to further scale its presence across neighbouring southern states in a calibrated manner.

Policy Support: Government initiatives such as Pradhan Mantri Awas Yojana 2.0 (PMAY 2.0), Interest Subsidy Scheme (ISS), PM Surya Ghar Yojana and revised Priority Sector Lending (PSL) norms are likely to drive enhanced demand for affordable housing finance.

Rising Urbanisation and Disposable Income: Rapid urbanisation and rising disposable incomes are expanding housing demand beyond metros, with Indias urban population nearing 40% and a growing middle-income base supporting sustained home ownership and mortgage penetration.

Digital G Technological Transformation: Increased adoption of digital platforms and artificial intelligence is enabling improved customer sourcing, streamlined business processes, enhanced credit evaluation and more effective customer engagement.

Shortfall in Housing: Indias housing deficit remains a key demand driver, with shortages estimated at 61.5 million units in 2025, rising to 64.0 million by 2030, particularly acute in the affordable segment, sustaining long-term housing finance demand.

Threats

Competitive Intensity: Increasing competition from banks and other housing finance companies may exert pressure on yields and margins.

Economic Volatility: Any slowdown or fluctuation in the economic environment could adversely impact loan disbursement and asset quality.

Evolving Regulations: Ongoing changes in policies and regulatory requirements may create higher compliance obligations and complexities.

Portfolio Exposure Risk: Exposure to economically sensitive customer segments may pose challenges in sustaining asset quality and managing credit risk.

PERFORMANCE REVIEW 2025- 26

Financial Performance

Particulars	FY2025- 26 ( in Crore)	FY 2024- 25 ( in crore)
Total Income	2,684.83	2,358.42
Total Expense	1,844.40	1,625.83
Profit Before Tax	840.44	732.59
Profit After Tax	655.59	574.11
Earnings Per Share
Basic (Rs.)	82.72	72.54
Diluted (Rs.)	82.14	71.97

Assets under Management

The companys Assets under Management (AuM) has crossed the ?20,000 crore milestone this year. In FY 2025-26, our AUM grew by 15% YoY at ?23,452 crores.

Income and Profits

Total income of the Company for the year ended March 31, 2026, was ?2,684.83 crores compared to ?2,358.42 crore in the previous year, growing 14% YoY.

Statement of Profit and Loss

Key highlights of the Statement of Profit and Loss for the year ended March 31, 2026, were:

Total Profit after tax (PAT) increased by 14% to ?656 crore in the current year from ?574.3 crore in the previous year.

The spread and Net Interest Margin (%) for the year stood at 5.20% and 7.93%, respectively.

Total Net Incomestoodat ?1,579.7 crores, growth of 17.7%.

Total expenses increased 13% during the year under review.

The Companys Operating Expenses Ratio (to average total assets) stood at 3.54% for the year ended March 31, 2026.

The Companys Return on Average Total Assets (ROA) stood at 3.29% for the year ended March 31, 2026.

Return on average Net Worth was 13.93%.

The Operating Leverage (Average Total Asset to Average Equity) stood at 4.23x for FY 2025-26.

Operational Performance

Aavas operates a retail-focused affordable housing Finance company, offering housing loans to low-and middle- income

belonging to the economically weaker section (EWS) and low-income group (LIG), with monthly incomes below 50,000, contributed 54% of the total loan assets.

Loan Products (%)

individuals and families for home purchase, construction, and renovation. Additionally, through its MSME-oriented lending

FY 2021- 22

FY 2022- 23 FY 2023- 24 FY 2024- 25 FY 2025- 26

portfolio, the Company supports small businesses, contributing to financial inclusion and grassroots economic development.

A substantial share of the Companys loan portfolio is directed towards financing the purchase and construction of single-unit, self-occupied residential properties. A large segment of Aavas customer base comprises borrowers who typically have limited or no access to formal mortgage financing from traditional bank credit.

The Company continues to maintain a strong focus on first-home ownership financing, particularly in underserved rural and semi-urban geographies. A significant proportion of customers are transitioning from informal or semi-permanent housing structures to formal pucca housing, reinforcing Aavas role in driving financial inclusion and long-term socio-economic value creation.

Loan products

Aavas Financiers Ltd. provides a range of housing finance solutions, such as loans for the purchase and construction of residential properties, alongside extension and renovation purposes. As of March 31, 2026, these housing loans constituted 65% of the total loan assets.

Beyond core housing finance, the Company also extends loans against property and MSME-focused financing, which together accounted for the remaining 35% of the total loan assets during the same period.

A significant portion of the portfolio remains directed towards financially underserved areas. As of March 31, 2026, customers

Housing Loans Non-Housing Loans

Disbursements

During the year, the Company disbursed ?6,775.1 crores in mortgage loans, an 11% increase over 6,123 crores the year before. As of March 31, 2026, the total amount of loans disbursed since inception is ~ ?40,900 crore.

0.68

Branch network

Aavas has continued to reinforce its physical footprint through a strategy of contiguous, on-ground expansion across key geographies. As of March 31, 2026, the Company operated a network of 435 branches across 13 states and 2 union territories, with a strong presence in Rajasthan, Gujarat, Maharashtra, and Madhya Pradesh. The Companys registered office is situated in Jaipur, Rajasthan. During FY 2025-26, Aavas further expanded its reach by adding net 38 new branches to its network.

FY 2021- 22	FY 2022- 23	FY 2023- 24	FY 2024- 25	FY 2025- 26
Branches	States

Outlook

The outlook for Aavas Financiers Ltd. remains positive, supported by a strengthening macroeconomic environment and favourable policy. Recent structural reforms, improving liquidity conditions, and a stable interest rate scenario are expected to enhance credit availability and support demand for affordable housing. Additionally, continued government focus on Tier II and Tier III city development and initiatives such as PMAY 2.0 are likely to create growth opportunities in the Companys core operating segments.

Looking ahead, FY27 should be a year of strong recovery, with transformation initiatives and incremental investments in branch expansion to drive growth. With a stable operating environment and a stronger platform in place, we are targeting around 20%+ growth in disbursements in FY27, while continuing to build a resilient, high-quality franchise.

Aavas continues to reinforce its distribution network, with plans to deepen its presence in existing geographies and expand into new regions through a branch expansion strategy. The Companys digital channels, CSC and eMitra, would meaningfully contribute in the coming fiscal. The Company plans to add about 30-40 branches, deepening its presence in Tier II and III markets through the RRO model, converting them into cost-efficient and self-sustaining branches to increase geographical reach. Expansion efforts are expected to remain focused on high-potential markets such as Uttar Pradesh, Gujarat, Tamil Nadu and other emerging regions. The Company aims at deepening penetration, leveraging its asset quality track record, and scaling operations through branch expansion in Uttar Pradesh. The Company expects ticket size expansion to remain a structural growth driver as customers increasingly

invest in aspirational housing with improved layouts, multiple amenities and better construction quality across semi-urban and rural markets.

Aavas Financiers Ltd. remains well-positioned, supported by capital adequacy, a diversified funding base, and a declining cost of funds. The Companys disciplined underwriting and focus on asset quality are expected to support credit performance, while emphasis on technology and operational efficiency will drive profitable growth. The Company also expects technology-led efficiencies, data analytics, and AI-enabled processes to further improve turnaround time, customer experience, operating leverage and long-term profitability.

ENVIRONMENTAL, SOCIAL G GOVERNANCE

Aavas Financiers Ltd. integrated Environmental, Social and Governance (ESG) principles into its core business operations. The Company aligns its ESG framework with globally recognised standards such as CDP, the United Nations Sustainable Development Goals, and the Global Reporting Initiative, with independent review and mapping support from Churchgate Partners. ESG disclosures are published on the Companys website, and the Business Responsibility and Sustainability Report (BRSR) forms part of the annual report in compliance with Securities and Exchange Board of India regulations. Crisil has assigned a strong rating to the company, while Aavas has scored Medium in Sustainability Economics, reflecting its standing among peers. A dedicated CSR and ESG committee oversee ESG initiatives, and the Company has voluntarily adopted BRSR Core Assurance.

The Company continues to foster an inclusive workplace through initiatives such as the Udaan Leadership Development Programme, alongside targeted training interventions for women employees. Aavas has also introduced progressive policies, such as monthly menstrual leave and self-defence training, to support employee well-being and empowerment. The Company had also raised Indias first social masala bond focused on womens empowerment, reflecting its broader commitment towards sustainable and socially responsible financing initiatives.

On the environmental front, Aavas collaborates with the International Finance Corporation to promote self-constructed green housing, facilitating the development of over 300 EDGE-certified green homes, and has received recognition from ASSOCHAM. Moreover, its Project Gati initiative improves operations and customer experience by streamlining loan processing and documentation requirements.

Aligned with our commitment to advancing sustainable housing, we added over 300 certified Green Homes during FY26, taking the cumulative total to over 650 green homes. This initiative highlights the Companys commitment to sustainable development and responsible business practices.

HUMAN RESOURCE

Aavas considers its workforce to be a critical pillar of its success, with a team with diverse skill sets and domain expertise, enabling business operations. The Company places significant emphasis on employee development and well-being, fostering a balanced work environment and a culture evolving in line with changing workplace expectations. As of March 31 st , 2026, Aavas had a total of 7,649 employees.

INTERNAL CONTROL SYSTEMS AND THEIR ADEOUACY

The internal financial control framework of Aavas Financiers Ltd. is designed to ensure the accuracy, compliance, and reliability of its financial reporting with applicable accounting standards. The Company has established well-defined policies and procedures that provide reasonable assurance related to the integrity of financial information. These controls

encompass the maintenance of accurate and complete records of transactions and asset movement, ensuring that all transactions are daily authorised and recorded in accordance with established guidelines and safeguarding assets to prevent or promptly detect any unauthorised use, acquisition, or disposition.

The Company has instituted a robust internal control mechanism, led by an independent assurance function and supplemented byexternal experts, where required. This program undertakes risk-based evaluations to assess adherence to internal policies and procedures. The Audit Committee reviews and approves the annual audit plan and is regularly apprised of key audit observations and recommendations. Appropriate corrective actions are tracked and implemented to strengthen the overall control environment.

CAUTIONARY STATEMENT

This section contains forward-looking statements regarding the Companys objectives, projections, expectations, and estimates. These statements are based on certain assumptions and expectations about future events, but the Company cannot guarantee their accuracy or realisation. Actual results may differ due to external factors beyond the Companys control. The Company assumes no obligation to publicly update or revise any forward-looking statements based on subsequent developments.