Target: ₹900

CMP: ₹745.70

Can Fin Homes saw a mixed quarter; NIM was 8bps higher to our expectation due to lower funding cost, while loan growth and asset quality were weaker. Credit flow was softer at ₹1,880 crore and missed PL estimates by 21 per cent due to centralisation of disbursals and reconciliation.

However, disbursal run-rate has normalized in Dec’23 to ₹700 crore and AuM for FY24 may grow by 12 per cent y-o-y. We are factoring a 15 per cent CAGR in loans over FY24-26 led by ticket size increase and expanding branch base/digital tie-ups.

However, we are watchful of credit growth given tight systemic liquidity and higher competitive intensity from banks. Under the leadership of Iyer, Canfin is on a path of structural transformation and most of the process strengthening is over. We also appreciate that quality of disclosures has improved significantly over last few quarters.

Canfin was upgraded by ICRA from AA+ to AAA. Hence, competitive pricing (due to increase in ticket size) would be offset by lower NCD cost (may decline by 10-15bps). There would be a slight delay in IT spends which may reduce its quantum and company expects yearly other opex of ₹52-53 crore in addition to ₹15 crore of IT costs.

We maintain multiple at 2.2x on Sep’25E ABV and target price at ₹900.

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