Accumulate Can Fin Homes; target of Rs 883: CD Equisearch

Accumulate

CD Equisearch's research report on Can Fin Homes

The company witnessed a decrease in disbursement by 21.9% to Rs 1879.46 cr in Q3FY24 as against Rs 2408.03 crs in Q3FY23 due to the tightening of the company processes implemented in the previous quarter, led by the fraud detected in the Ambala branch. Consequently, company registered a lower growth in loan book which grew by 13% year-on-year to Rs 34053.41 crs in Q3FY24 (Vs Rs 33359.3 crs in Q2FY24). The salaried and professional segment, comprising 72% of the book, grew by 10.8% year-over-year to Rs. 24562 crs, whereas, selfemployed and non-professionals grew by 19.3%. The company NIM has improved to 3.92% in Q3FY24 from 3.47% in Q3FY23 supported by higher reset rate on loans worth Rs 6700 cr and improvement in rating by India Ratings. Due to the NIM expansion the company saw a robust growth in net interest income grew by 30.6% to Rs 328.83 crs in Q3FY24 as against Rs 251.71 crs during the same period in the previous year. For provision, a large chunk of amount has been kept aside (Rs 30.81crs in Q3FY24 Vs Rs 8.42 crs in Q3FY23) on account of restructuring of book. PBT grew by 25.0% to Rs 255.69 crs in Q3FY24 on yoy basis.

However, growing presence of ‘cost competitive’ banks in the housing sector may cause pressure on banks spread and headwinds in business scaling. Weighing odds, we assign ‘accumulate’ rating on the stock with revised target of Rs 883 (previous target: Rs 645) based on 2.3x FY25e BV.

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Can Fin Homes - 2922024 - cd