Company Update : Can Fin Homes Ltd By Motilal Oswal Financial Services Ltd
Healthy disbursement momentum; NIMs down ~10bp QoQ
In-line earnings aided by lower tax rate; minor improvement in asset quality
* Can Fin Homes (CANF)’s 4QFY25 PAT grew ~12% YoY to ~INR2.3b (in line). FY25 PAT grew ~14% YoY to INR8.6b. 4Q NII grew ~6% YoY to ~INR3.5b (in line). Fee and other income stood at ~INR168m (PY: INR159m).
* Opex declined ~2% YoY to INR707m (~6% higher than MOFSLe). The costincome ratio stood at ~19.4% (PQ: 16.9%, PY: 20.9%). PPoP grew ~8% YoY to INR2.95b (in line).
* Effective tax rate for the quarter stood at ~16% (PQ: 21% and PY: ~23%) ? 4Q RoA/RoE stood at ~2.6%/~18.5%.
Healthy momentum in disbursements; advances grew ~9% YoY
* CANF’s 4QFY25 disbursements grew ~6% YoY and ~30% QoQ to INR24.5b. Disbursements saw healthy momentum during the quarter.
* Advances grew ~9% YoY to ~INR382b. Annualized run-off in advances stood at ~15% (PQ: 14% and PY: ~16%).
Reported NIMs down ~10bp QoQ; bank borrowings decline QoQ
* NIM (reported) declined ~10bp QoQ to ~3.64%. Reported spreads declined ~13bp QoQ due to a decline in yields and an increase in CoB.
* Bank term loans declined to ~52% in the borrowing mix (PQ: 60%). The majority of the borrowings during the quarter were through NCDs.
Minor improvement in asset quality; GS3 improves ~5bp QoQ
* Asset quality saw minor improvement, with GS3 declining by ~5bp QoQ to ~0.87% and NS3 declining ~4bp QoQ to ~0.45%. PCR on stage 3 loans rose ~260bp QoQ to ~47.7%.
* Provisions stood at INR154m (vs. est. INR69m), resulting in annualized credit costs of ~16bp [PQ: ~24bp and PY: ~2bp]. While there was a minor decline in PCR on standard loans, CANF increased the management overlay provisions to INR590m (PQ: ~INR340m).
DSA channel in sourcing mix rose to ~80%
* The average ticket size of incremental housing loans stood at INR2.4m (PQ: INR2.3m).
* DSA channel in the sourcing mix rose to ~80% (PQ: 76%)
Valuation and view
CANF reported a decent quarter as earnings were in line with estimates, driven by a lower effective tax rate. Disbursements saw strong sequential momentum, asset quality improved marginally, while NIMs contracted by ~10bp QoQ. CANF might look to use its margin levers to deliverstronger loan growth in FY26. We may revise our estimates and TP after the earnings call on 24th Apr’25
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