Buy Can Fin Homes; target of Rs 850: Sharekhan

buy

Sharekhan's research report on Can Fin Homes

Loan growth and disbursements were weak during the current quarter due to issues pertaining to registrations in Karnataka following the introduction of E-Khata. Asset quality slightly deteriorated; GNPAs were higher by 5 bps q-o-q and 1 bps y-o-y. Besides, credit cost stood at 24 bps vs. 15 bps q-o-q, higher than our estimates. Thus, PAT at Rs. 212 crore (up 5.9% y-o-y and 0.2% q-o-q) was below estimates, mainly led by higher-than-expected credit cost and weak business momentum.

Outlook

We maintain BUY with a revised PT of Rs. 850 as stock has witnessed sharp decline of 27% from the beginning of Q3FY2025. The stock price trend will see reversal as we expect AUM growth and asset quality will improve in FY25 and FY26, along with generating a sustainable RoE of 17%. Valuations are still reasonable; hence, we maintain our BUY recommendation. At the CMP, the stock trades at 1.9x/1.6x/1.4X its FY2025E/FY2026E/FY2027 BV.

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Can Fin Homes - 21012025 - khan