Buy Can Fin Homes; target of Rs 860: Prabhudas Lilladher

Prabhudas Lilladher's research report on Can Fin Homes

CANF saw a steady quarter as disbursals were 6.7% higher to PLe at Rs24.6bn although NIM was a slight miss at 3.8%. Credit growth for FY25 was muted at 9.2% YoY due to issues in Karnataka/AP/Telangana which are being resolved. In FY26, company is targeting a disbursal growth of 20% and AuM growth of 13-15% YoY. However, we see a lower AuM CAGR of 11.5% over FY25-27E given (1) LOS/LMS adoption may impact disbursals (2) competition may increase due to falling interest rates. CANF sees a lesser impact of rate cuts on NIM due to faster repricing of liabilities; it has guided a 3.5% NIM for FY26E (vs 3.6% in FY25). However, due to competition we envisage a 16bps YoY decline in FY26 NIM to 3.46%.

Outlook

Asset quality improved as SMA-0 declined materially by Rs7.6bn QoQ which drove a provision write-back of Rs100mn while tax write-back of Rs190mn was used to increase management overlay by Rs250mn to Rs590mn. We keep multiple at 1.8x on Mar’27 ABV and maintain TP at Rs 860. Retain ‘BUY’.