Buy Can Fin Homes; target of Rs 1050: Sharekhan

Sharekhan's research report on Can Fin Homes

Can Fin Homes reported a strong performance in Q2FY2025. Earnings were in line with estimates, mainly led by lower-than-expected credit cost and improvement in NIM. Business momentum remained strong, as disbursements were up 17.9% y-o-y/28.8% q-o-q due to higher sanctions and demand across geographies, barring a couple of states. AUM growth stood at 9.7% y-o-y and 2.9% q-o-q. Asset-quality trends also improved on a sequential basis to 0.88% during the quarter, further likely to improve for FY2025 and FY2026. Credit cost reduced to 15 bps (AUM) in Q2FY2025 from 28 bps in Q1FY2025 and 87 bps in Q2FY2024.

Outlook

We maintain BUY with an unchanged PT of Rs. 1,050. The stock trades at 2.2x/1.9x/1.6x/1.6x its FY2025E/FY2026E/FY2027E ABV estimates.