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Can Fin Homes logged a satisfactory quarter in terms of disbursements, asset quality, and profitability, while AUM growth was slightly softer. 1QFY27 AUM stood at Rs429.6bn, growing 11% yoy, while prepayment remained elevated at ~17.6%, thus weighing on growth. Overall asset quality was stable (marginal uptick due to seasonality); the management expects credit costs to remain contained at ~10bps. Margins (NIMs) are expected to uphold at 3.75–3.80%, supported by stable COFs and optimizing asset mix driven by a strategic shift toward high-yielding SENP and non-housing loans. Cost-to-income is expected to remain elevated (~19.5%) due to ongoing IT transformation, and normalize to ~18% after a full system rollout. Overall, 1Q is a steady quarter, with AUM growth set to reach ~14% in FY27E, as prepayment moderates and disbursements pick up. We maintain ADD on Can Fin with unchanged Jun-27E TP of Rs1,000 (implying FY28E PBV of 1.6x).

Strong disbursement and profitability, while growth remains soft

Can Fin posted a steady 1QFY27, with disbursements up 29% yoy (Rs26.1bn) and PAT growing 20% yoy to Rs2.7bn; AUM growth was muted at 11% yoy (Rs429.6bn) due to elevated prepayments. Reported NIM declined by ~26bps to 3.81%, largely driven by portfolio reset (from annual to quarterly); COF was stable at 6.98%. Cost-to-income rose to 19.5% (from 18.3% a year ago), on continued IT-transformation spends, though credit cost was contained at ~12bps. Asset quality was firm, with 0.87% GNPA (down by ~11bps yoy) and 0.42% net NPA (down by ~12bps yoy). The book mix continued shifting toward the higher-yielding SENP, now 32% of AUM and non-housing AUM share of ~17%.

Remains confident of delivering on guidance

Management remains confident of accelerating AUM growth toward its 14% target for FY27, as the strategic pivot to the higher-yielding SENP segment continues to gain traction, while indicating that elevated prepayment rates are still a key monitorable. The mgmt also indicated it targets achieving NIM of 3.75–3.80% and cost of funds to be broadly stable following the recent liability-management initiatives; any marginal yield expansion would be mainly driven by this evolving asset mix. The mgmt also stated it is progressing well on its IT transformation and core system upgrades, which would be rolled out across all branches by Sep-26, without causing any material disruption to the business. This is likely to normalize cost-to-income back to ~18% in the medium term, while credit costs are likely to be contained at ~10bps, supported by stringent underwriting standards; overall, the company targets steady-state ROA of ~2.4% and ROE of ~18% for FY27.

Estimates largely unchanged; maintain ADD

Considering the 1QFY27 developments and management commentary, we retain our FY27-29 estimates. We maintain ADD with unchanged Jun-27E TP of Rs1,000, implying FY28E PBV of 1.6x. Going forward, we expect AUM growth to improve, toward the ~14– 15% target, as prepayments moderate and owing to healthy disbursements. ROA and ROE are expected to remain healthy, supported by a successful rollout of the company’s IT transformation and strong asset quality, along with contained credit cost.

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