Buy Can Fin Homes; target of Rs 700: Motilal Oswal

Motilal Oswal is bullish on Can Fin Homes recommended buy rating on the stock with a target price of Rs 700 in its research report dated April 28, 2023.

Broker Research

April 28, 2023 / 22:54 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on Can Fin Homes

Can Fin Homes (CANF) reported a healthy operational performance in 4QFY23, with 35% YoY growth in PAT to ~INR1.7b (9% beat). Despite elevated credit costs (~30bp annualized), the earnings beat was driven by the low effective tax rate. FY23 PAT grew 32% YoY to INR6.2b (PY: INR4.7b). Interest rate reset for existing customers and incremental disbursements at higher interest rates led to a sequential improvement of ~20bp in yields. Higher yields offset the 25bp QoQ rise in CoF, leading to stable NIM of 3.4%. Repricing of ~INR180b of loans in FY24 will help CANF sustain (or even improve) NIM. We estimate NIM of ~3.5% in FY24/FY25. We increase our FY24/FY25 PAT estimates by ~7%/5% to factor in high margins, low credit costs and low effective tax rate. We model an AUM/PAT CAGR of 16%/17% over FY23-25E for RoA/RoE of 2.1/18% in FY25.

Outlook

Valuations could be re-rated to 2x P/BV if CANF continues to deliver strong loan growth and pristine asset quality as exhibited in the past. Maintain our BUY rating with a TP of INR700 (1.8x FY25 BV).

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