Broker’s call: Can Fin Homes (Buy)

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Target: 696 rupees

CMP: INR 616.80

Can Fin Home loan book for the quarter grew by 5 per cent QoQ and 18 per cent YoY, at around Rs.31,600 crore. CFHL management has expressed its commitment to continue expanding the loan book at an annual rate of between 18 and 20 percent. The NII grew by 5 percent sequentially and 12 percent year-over-year. PAT growth was 9 percent quarter-over-quarter and 35 percent year-over-year. In line with management’s guidance, NIM shrank by 10 basis points sequentially, at 3.4 percent.

Best-in-class asset quality During the quarter, the company improved its asset quality by lowering GNPA and NNPA by approximately 5 basis points, at 0.55% and 0.26%, respectively.

The company also raised the PCR level by 100 basis points sequentially to 62 percent, just to exercise a conservative approach. Going forward, management is directed to keep the PCR ratio at 50-55 percent.

We have revised our estimates and maintain our view on Can Fin Homes Ltd. With a Buy rating and a price target of €696 (2.2x adjusted book value for FY24), indicating an upside of approximately 13%. We believe CFHL will increase its loan book by 17-15 percent for the foreseeable future and maintain its strong asset quality.