Accumulate Can Fin Homes Ltd For Target Rs. 767 By Geojit Financial Services Ltd
Business turnaround on the horizon
Can Fin Homes Ltd. (CANF) is the housing finance arm of Canara Bank. Predominantly active in South India, the company offers a wide range of financial products, including housing loans, composite loans, non-housing loans, mortgage loans, and commercial property loans, in addition to fixed and cumulative deposits
* The loan book grew by 9% YoY to Rs.37,155cr. The client base now stands at 2.73 lakh. Disbursements slowed to Rs.1,879cr, a decline of 21% QoQ, attributed to weak disbursements in the Karnataka following the introduction of e-khata.
* Net Interest Income grew by 4.8% YoY to Rs. 345cr. The Net Interest Margin (NIM) stayed flat at 3.73%.
* The cost-to-income ratio improved to 16.92%, but it is expected to increase due to reforms in IT transformations.
* PAT grew marginally by 6% YoY to Rs. 212cr due to a 61% QoQ increase in provisions, attributed to a slight deterioration in asset quality.
* Asset quality experienced slight deterioration, with GNPA/NNPA at 0.92%/0.50% compared to 0.88%/0.47% in Q2FY25. The Provision Coverage Ratio (PCR) on stage 3 assets decreased to 45% from 47% sequentially.
Outlook & Valuation
CANF reported weak operational performance, primarily due to a slowdown in property registrations in Karnataka caused by technical glitches in the state registration system. As the process gets streamlined, business is expected to improve going forward. Although management has reduced its FY25 guidance on disbursements and AUM, they have maintained their guidance for FY26. We expect the ROA/ROE to remain largely stable at 2.2% for FY26-27. Therefore, we reiterate our Accumulate rating with a revised target price of Rs. 767, based on 1.5x FY27E BVPS
For More Geojit Financial Services Ltd Disclaimer https://www.geojit.com/disclaimer
SEBI Registration Number: INH200000345
.jpg)
