Target: ₹696
CMP: ₹616.80
Can Fin Home’s loan book for the quarter grew by 5 per cent q-o-q and 18 per cent y-o-y, at about ₹31,600 crore. The management of CFHL has expressed its commitment to continue expanding the loan book at an annual rate of 18-20 per cent. The NII grew by 5 per cent sequentially and 12 per cent y-o-y. PAT growth was 9 per cent q-o-q and 35 per cent y-o-y. In line with the management guidance, the NIM contracted by 10 bps sequentially at 3.4 per cent.
Best-in-class asset quality During the quarter, the Company improved its asset quality by reducing the GNPA and NNPA by about 5 bps at 0.55 per cent and 0.26 per cent, respectively.
The company also raised its PCR by 100 bps sequentially to 62 per cent, merely to practice a conservative approach, and in the future, management is guided to maintain a PCR ratio at 50-55 per cent.
We have revised our estimates and maintained our view on Can Fin Homes Ltd. with a Buy rating and a target price of ₹696 (2.2x FY24 adjusted book value), suggesting a ~13% upside. We believe that CFHL will grow its loan book at 17-15 per cent in the foreseeable future and maintain its robust asset quality.