India Ratings upgrades Can Fin Homes to ‘IND AA+’ with stable outlook

The company was able to raise funds at much competitive rates which enabled it to lend out the loans at attractive pricing. This helped in facing off the stiff competition from banks and other home lenders.

The company was able to get an upgrade in its ratings based on its past record of operations which puts it in good stead to expand its franchisee.

It was able to grow its loan book by a decent 7 percent in FY21 and the growth in H1FY22 has been much stronger at 13 percent on an annual basis. This is much higher than the industry standards. Also, its headline NPA numbers have remained below 1 percent for the past few years.

The housing finance company’s loan book is predominantly focused on salaried and professional borrowers which contribute 74 percent of its loan disbursal. It derives 90 percent of its loan disbursals through home loans which has helped it maintain its credit cost within a comfortable range. Furthermore, its negligible exposure to construction finance has helped it ward off stiff headwinds that this segment has been facing.

The home lender has been able to maintain stable profitability, with net margins of over 3 percent. Its operating leverage got impacted due the pandemic but as the credit growth is reviving, the leverage is expected to improve.

To be sure, CFHL was started in 1987 by Canara Bank in association with Housing Development and Finance Corporation and Unit Trust of India. It caters primarily to salaried borrowers in urban areas and 69 percent of its advances are sourced from southern states. For the six months ended September 2021, the company had a loan book of Rs 23,500 crore and a network of 187 branches and affordable housing centres and 13 satellite offices.