Buy Can Fin Homes; target of Rs 950: Prabhudas Lilladher

Prabhudas Lilladher's research report on Can Fin Homes

Canfin saw a mixed quarter since loan growth at ~11% YoY missed PLe by 111bps and PPoP was affected due to one-time costs; however, asset quality improved QoQ with 9bps reduction in stage-3 driven by recoveries in NPA and OTR. Disbursals in FY24 were softer at Rs81.8bn (-8.6% QoQ); with most processes being strengthened, company is targeting disbursals of Rs110bn in FY25 which could translate to 15% YoY loan accretion. This would be achieved by (1) improving volumes led by better branch productivity also through digitization and (2) increasing ATS from Rs2.2mn-2.5mn to Rs2.7mn. Credit standards would not be diluted since CANFIN now focuses on customers with CIBIL score of 650+ (earlier 600+).

Outlook

We are watchful of credit growth due to tight liquidity and competition from banks. Given RoA/RoE profile of 2.1%/17% we maintain multiple at 2.2x but as we roll forward to Mar’26 ABV, our TP increases to Rs950 from Rs900. Retain ‘BUY’.

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Can Fin Homes - 02052024 - prabhu