Company Update : Can Fin Homes by Motilal Oswal Financial Services Ltd
Earnings beat driven by healthy NII and benign credit costs
Reported NIM improves ~20bp QoQ; Advances growth muted at ~8% YoY
* Can Fin Homes (CANF)’s PAT for 2QFY26 grew ~19% YoY to ~INR2.5b (~5% beat). NII grew 19% YoY to ~INR4b (~8% beat). Fees and other income stood at ~INR63m (PY: INR72m).
* Opex rose ~28% YoY to INR762m (~13% higher than MOFSLe). The cost-toincome ratio stood at ~19%. (PQ: ~18%, PY: ~17%).
* PPoP grew ~16% YoY to INR3.3b (~5% beat). The effective tax rate for the quarter stood at ~24.2% (PQ: 19.4% and PY: ~22.8%). CANF’s 2QFY26 RoA/RoE stood at ~2.45%/~18.4%.
Muted loan growth; disbursements grew ~26% QoQ
* CANF’s 2QFY26 disbursements grew ~7% YoY and 26% QoQ to INR25.4b.
* Advances grew ~8% YoY and ~2.3% QoQ to ~INR397b. Annualized run-off in advances was elevated at ~17.1% (PQ: 15.3% and PY: ~15.2%), suggesting that BT-OUTs inched up potentially because the company did not take any additional PLR cut in the quarter
Reported NIM improves ~20bp QoQ; bank borrowings rise sequentially
* NIM (reported) rose ~20bp QoQ to ~3.83%, primarily due to a decline in the cost of borrowings. NIM (calc.) expanded ~35bp QoQ.
* Reported yields were stable QoQ at 10.1%, while CoB declined ~20bp QoQ to 7.3%, leading to reported spreads rising by ~20bp QoQ to 2.8%.
* Bank borrowings during the quarter rose to 57% of the total borrowings (PQ: 53%).
Asset quality improves; GS3 declines ~5bp QoQ
* Asset quality exhibited minor improvement, with GS3 and NS3 declining ~5bp QoQ each to ~0.95% and ~0.5%, respectively. PCR on stage 3 loans rose ~380bp QoQ to ~48.8%.
* Credit costs stood at INR31m (vs. MOFSLe of INR140m), resulting in annualized credit costs of ~3bp (PQ: ~27bp and PY: ~15bp).
DSA channel in the sourcing mix stable at 79%
* Average ticket size (ATS) of incremental housing loans stood at INR2.5m (PQ: INR2.4m).
* The DSA channel in the sourcing mix was stable at ~79%.
Roadmap for FY28
* Geographical concentration mix of 60:40 in South and North, respectively (vs. 68:32 as of now).
* Product mix: Housing and non-housing mix of 80:20, respectively (vs. 85:15 currently)
* Segment mix: Salaried and self-employed mix of 65:35, respectively (vs. 69:31 currently)
* Sourcing mix: Reduce DSA reliance to 60% of overall sourcing vs. 79% currently.
Valuation and view
* CANF delivered a mixed performance during the quarter, with earnings exceeding expectations driven by strong net interest income and lower credit costs. However, loan growth remained subdued despite a ~26% QoQ rise in disbursements, as elevated BT-outs led to higher repayments. Asset quality showed improvement, resulting in benign credit costs, while NIMs expanded by about 20bp owing to a decline in the cost of borrowings.
* Management commentary on loan growth and margin trajectory for FY26 and FY27 will be the key to watch, as it will provide clarity on the company's growth strategy and profitability outlook. We may revise our estimates and TP following the earnings call on 20th Oct’25.
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