YES Securities' research report on Can Fin Homes
Significant NIM expansion and lower opex drove a small beat over our higher-than-street PPOP estimate. Precautionary covid-related provisions of Rs360mn (total at 35 bps of loan assets) suppressed PAT growth to 15% yoy. Accentuated fall in borrowing cost, driven by quicker re-pricing of bank loans (most linked to 1m/3m MCLR) and cheaper funds from NHB, caused a NIM increase of 20bps in Q1 FY21. About 14% of customers (majority from regular pool) have not paid any installment in the six-month moratorium. Only 5-6% customers have witnessed salary cut or a job loss. CANF has substantially collected overdues as of March 1. Management does not expect any significant spike in NPL ratios and estimates a steady credit cost for FY21 (30-35 bps). Company plans to raise equity capital up to Rs10bn. CANF is the safest bet in HFC space given strongest balance sheet. Robust liquidity position and strong distribution in Tier 2-4 markets underpin stronger growth prospects.
Retain BUY. Raise FY21/22 EPS & ABV estimates by 2-5%. Stock trades at 1.8x FY22 P/ABV for an avg. RoA/RoE delivery of 1.9%/17% over FY21-22 without equity raise.
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