Buy Can Fin Homes; target of Rs 630: Motilal Oswal

Motilal Oswal's research report on Can Fin Homes

CANF, in our view, is a franchise which has proven its astute underwriting, strong risk management, and inclination to deliver industry-leading loan growth in the mortgage sector at least (if not more) over the last decade. This report is expected to draw references from our recent interaction with the senior management of CANF in their corporate office at Bangalore, India. What we want to highlight through this report is that despite the vacant MD/CEO position at CANF for over a month, the business momentum under the interim leadership of DMD Amitabh Chatterjee and CFO Prashanth Joishy has remained strong. CANF has long demonstrated that it is a processes-driven organization and that it will continue to demonstrate the same ethos and trajectory even under the leadership of the successor to ex-MD Girish Kousgi. Management shared that the Board of Directors (BoD) at CANF is keen to onboard a new MD/CEO from the mortgage sector itself (potentially from the private sector, in our view) by offering a compensation in line with the markets (even though the pay-scale at CANF, which is a subsidiary of public sector Canara Bank, is otherwise lower).

Outlook

We model a Loan Book/PAT CAGR of 17%/~19%, respectively, over FY22-FY25E. For a RoA/RoE of 1.9%/17% in FY24E and triggers for valuation re-rating if the new management team (of MD&CEO/CFO/CRO) can gain investor confidence, we reiterate our BUY rating with a TP of INR630 (based on 1.8x Sep'24 P/BV).