Buy Can Fin Homes; target of Rs 1000 Prabhudas Lilladher

Prabhudas Lilladher's research report on Can Fin Homes

CANF saw a good quarter since NII/NIM surprised positively as reported NIM increased by 8bps QoQ to 3.65% driven by favorable loan yields and funding cost. A key monitorable, loan growth was in-line at 9.7% YoY, and the company is targeting disbursals of Rs100bn for FY25, suggesting loan growth of 13-15% YoY for FY25. It aims to improve loan growth to 15-17% in FY26E. While we are forecasting an AuM CAGR of 13.7% over FY24-27E, there are upside risks to growth due to renewal of CLSS, focus on SENP and adoption of technology initiatives. As per the management, following levers are in place to cushion NIM: (1) NHB sanction at a lower cost, (2) 27% of overall borrowings are repo linked and (3) share of higher yielding SENP in incremental credit flow is high at 30-35%.

Outlook

We remain constructive on CANF. With valuation at 1.9x and retaining multiple at 2.1x, we raise TP to Rs1,000 from Rs930 as we roll forward to Sep’26 ABV. Retain ‘BUY’.