Can Fin Homes Ltd (CFHL) reported significant earnings growth of 41% YoY at Rs 60 cr which was led by healthy NII growth backed by strong advance growth and improvement in NIMs. CFHL, advance growth for Q3FY17 was at 28% at Rs 12,688 cr and management maintained 27% loan book growth in FY17 to reach Rs. 13,500 cr. CFHL’s NII during the quarter was up by 31% at Rs 119cr.
CFHL has reported consistently high loan growth along with improvement in margins with stable asset quality. Also, management is optimistic to maintain growth momentum with target of Rs. 13,500 cr loan book by FY17. We believe valuation multiple expansion will be contingent upon sustainability of high loan book growth, further improvement in profitability and stable asset quality especially LAP. At CMP the stock trades at 4.3x its FY17E ABV and 3.4x FY18E P/ABV. We value CFHL at FY18E P/ABV multiple of 4.2x to arrive at target price of Rs. 2116 and continue to have BUY rating.
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