Can Fin Homes shares rally 6% post Q3 results. Brokerages have ‘Buy’ rating

Market


Shares of Can Fin Homes Ltd rallied more than 6% to 554 apiece on the BSE in Monday’s trading session as the company’s net profit rose to 151 crore for the third quarter ended December 2022 as compared to 115 crore in the year ago quarter.

“Can Fin Homes reported a stable quarter driven by higher net interest income (NII) and lower provisions as AuM growth at around 20% YoY was in-line. Company expects disbursal momentum to improve in Q4 while it envisages a loan growth of 20% in FY24E. As asset quality risks are receding, share of self-employed is gradually rising and over the medium term, it could increase from 26% to 30%,” highlighted Prabhudas Lilladher.

As per the company, net interest margin (NIM) for Q3 FY23 has bottomed out and could improve from hereon. While NIM remains a key monitorable, only 28% of assets have been repriced to Reserve Bank of India (RBI) rate hikes compared to 65-70% of liabilities. This suggests that overall NIM for FY24 could be higher vs FY23 and NII growth could surpass loan growth, highlighted the brokerage.

“We see FY24 NIM at 3.3% (vs 3.24% in FY23). OTR pool is at 7 bn or 2.3% (provision coverage ratio or PCR of 10%); while repayment has not started, 30% customers have started repaying. On MD&CEO succession, new candidate is expected to join before FY23 end,” the brokerage has maintained its ‘Buy’ rating on the stock with a target price of 700. 

“Key takeaways of this quarters’ performance were a) further acceleration in SENP HL growth (book grew by 22% yoy, a significant improvement from 8% yoy a year back), b) more-than-expected compression in NIM/Spread, and c) benign credit cost underpinned by sustained strong asset quality trends. Co. expects continuance of sturdy loan growth with controlled BT Out, and stable-to-improved margins in the medium term,” said brokerage Yes Securities which also has a Buy rating on the stock with a target price of 680.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.


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