Neutral Can Fin Homes; target of Rs 775: Motilal Oswal

Motilal Oswal's research report on Can Fin Homes

Can Fin Homes (CANF)’s 3QFY25 PAT grew ~6% YoY to ~INR2.1b (in line). NII rose 5% YoY to ~INR3.4b (in line). Other income was ~INR58m (PQ: INR74m) because of lower disbursements, translating into a lower fee income. Opex grew ~20% YoY to INR593m (in line). CANF’s cost-to-income ratio was ~17% (PQ: ~17%, PY: ~15%). Its 3QFY25 RoA/RoE stood at ~2.25%/~17.6%. Management guided a loan growth of ~15% in FY26. The company expects disbursements in 4QFY25 to remain in line with levels recorded in 4QFY24. However, if the situation improves in Karnataka (KAR), then it could exceed the above guidance. Further, management guided FY26 disbursements of ~INR120b, if the prevailing e-Khata issues in KAR are resolved.

Outlook

The stock’s valuation of 1.4x FY27E P/BV suggests management’s inability to deliver on its loan growth guidance because of recurring external events that impede strong business momentum. We reiterate our Neutral rating with a TP of INR775 (premised on 1.6x Sep’26E P/BV).