Latest news with #CanFinHomes
Indian Express
07-05-2025
- Business
- Indian Express
Can Fin Homes is no longer a market darling, but are better days ahead?
Can Fin Homes is regarded as one of the most respected housing finance companies (HFCs) in India. Its reputation stems from a simple reason: it avoided the mistakes that brought down several of its peers. In the years leading up to 2018, many HFCs aggressively expanded into real estate developer financing — a strategy that backfired in the aftermath of the 2018 IL&FS crisis. A lack of funding exposed gaping issues in the developer financing segment, leading to the downfall of many companies, including DHFL, PNB Housing Finance, Edelweiss Housing Finance (now Nido Home Finance), and Indiabulls Housing Finance (now Samaan Capital). During this period, Can Fin Homes continued to remain profitable. Its NPAs ratios were the best in class, not only during the 2018-19 crisis but also during the Covid lockdown. Yet, its price-to-book value has been continuously trending downwards despite a profit growth of 19.3% between FY19 and FY25. Fig 1 (Source: The P/B ratio has steadily declined and is now below levels seen during the Covid-19 market crash. The stock has not performed well either. Fig 2 (Source: Why is this happening? Several structural shifts in the regulatory and competitive landscape post-2018 help explain the de-rating. Regulatory change in favour of banks: Until 2019, HFCs were regulated by the National Housing Bank (NHB), which acted both as a regulator and a refinancer. This led to concerns over a conflict of interest. Regulatory norms under NHB were relatively light touch — capital adequacy norms were lower, liquidity requirements minimal, and asset-liability mismatches (ALM) weren't strictly monitored. This allowed HFCs to grow rapidly, often by borrowing short-term and lending long-term. The IL&FS crisis changed everything. In response, the Finance Act of 2019 transferred the regulation of HFCs from NHB to RBI, aligning them with NBFCs under tighter scrutiny. Post-2019, HFCs faced several new challenges: Higher Capital Requirements: Equity capital as a percentage of loans was raised to 15% (from 12%), phased in by 2022. Strict asset liability norms reduced the freedom to raise short-term funds for long-term loans. Exposure Norms: Builder loans and LAP (Loan Against Property) came under tighter control. Funding Costs: The RBI doesn't refinance HFCs like NHB did, removing the conflict of interest. Banks also enjoy cheaper, more stable funding versus HFCs. The result was that HFCs have lost their funding edge, and banks, flush with deposits, are much better positioned to give home loans at lower rates. Is asset quality also worsening? Not significantly. Can Fin Homes' GNPA ratio as of FY24 stood at just 0.9%, the best among peers. However, a slight uptick since FY23, at a time when most peers have shown improvement, could be a cause for concern. Fig 3 (Source: First Principles Investing, Annual Reports and Investor Presentations) Fig 4 (Source: Motilal Oswal Report on Can Fin Homes – Q4FY25 Update) In addition to the above, one possible reason for a de-rating could be branch-level frauds detected over the last 2-3 years. A branch in Ambala reported a fraud of Rs 40 crore in FY23, and another branch in Bhilwara, Rajasthan, reported a fraud of Rs 3.5 crore. Another incident involved a whistleblower complaint by an employee in October 2024 alleging recruitment fraud by a senior executive. While isolated, a combination of all these factors has likely led to the de-rating in Can Fin Homes. Is profitability a concern? Profitability has not declined materially. However, while ROE remains high compared to listed HFC peers, it has trended downward compared to FY18. Fig 5 : (Source: Can Fin Homes Ltd FY24 Annual Report) Further investments in IT overhaul and branch expansion is likely to put pressure on margins in the near term until benefits of these investments begin to accrue. Does Can Fin suffer from operational challenges? Disbursement growth remains a key hurdle in expanding the loan book. In FY24, total disbursements fell to Rs 8,177 crore, down from Rs 8,947 crore in FY23. In FY25, it is up by a meagre 4.8% at Rs 8,568 crore. Fig 6: (Source: The reason for continued slowdown, especially in Q3FY25, was due to Karnataka's e-khata issue that stalled nearly Rs 400 crore worth of business. As a result, Q3 FY25 disbursements were flat year-on-year. Impact of IT systems overhaul Can Fin Homes is in the midst of an IT overhaul. This involves implementing a completely new Loan Origination System (LOS) and Loan Management System (LMS) package, along with other key operating functions. Implementation is expected to take 9-12 months, and the project is expected to go live in Q3 FY26 (October-December 2025). However, near-term disruptions are likely. The IT expenses have already increased by about Rs 3 crore per quarter since the March 2024 quarter. From FY27, annual operational costs are expected to rise by approximately Rs 25 crore per year. The initial capital expenditure is also significant, estimated potentially around Rs 60-75 crore, which will be amortised over 6-7 years. Has Can Fin Homes' business model changed for the worse? While salaried customers still account about 72-73% of the loan book, the company is tweaking its product mix. It's now strategically increasing exposure to self-employed segment (SENP), which accounts for 35-38% of incremental disbursements and its share in total loan mix has gone up from 25% in FY22 to nearly 30% in FY25. The company is expanding Loan Against Property (LAP), opening it up to new customers, and is aiming to take LAP to around 7% of total mix. These changes aim to protect margins and find newer avenues of growth. But this raises a fundamental question. Can it go down the risk curve, grow well and keep portfolio quality at similar levels compared to when it was primarily serving salaried employees only? The consensus, assuming market valuations are a reflection of investor consensus, is that Can Fin Homes of 2025 is not the Can Fin Homes of the last decade. Facts versus outcome Investors such as 3P India fund 1 which have consistently raised stake in Can Fin Homes Ltd over the last few quarters have a contrarian view. Their actions suggest that it believes that factors such as disbursement slowdown, IT overhaul, product mix changes are either temporary problems or unlikely to materially change the competitiveness of canfin homes. On an absolute basis, the P/B ratio is at a 10-year low. Fig 7 (Source: On a relative basis, Can Fin Homes valuation is towards the lower end of the spectrum (Top 15 HFCs in India). Does it deserve this valuation? Is the market factoring in too much negative? Or is the market factoring in a slow but continued decline in performance? Investors looking to either invest or reconsider their current holdings in the HFC space are faced with these questions. There are no easy answers, and how it plays out remains to be seen. Note: We have relied on data from and throughout this article. Only in cases where the data was not available have we used an alternate, but widely used and accepted source of information. Rahul Rao has helped conduct financial literacy programmes for over 1,50,000 investors. He has also worked at an AIF, focusing on small and mid-cap opportunities. Disclosure: The writer or his dependents do not hold shares in the securities/stocks/bonds discussed in the article. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
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Business Standard
05-05-2025
- Business
- Business Standard
Can Fin Homes targets 20% disbursement growth in FY26 on rate relief
Can Fin Homes Ltd plans to grow disbursements by 20 per cent year-on-year (YoY) in the current financial year (FY26), up from five per cent in FY25, on the back of softening interest rates and improved business conditions in Karnataka and Telangana. It disbursed loans worth ₹8,568 crore in FY25, compared to ₹8,178 crore in FY24. Suresh Iyer, Managing Director and Chief Executive, Can Fin Homes, told Business Standard, 'The housing sector is looking up. The lower policy rates mean lower equated monthly instalments (EMIs), and that is definitely a positive.' Internally, the company is targeting 20 per cent disbursement growth, which should result in 13–15 per cent growth in assets under management (AUM) in FY26. Its outstanding loan assets grew by 9 per cent YoY to ₹38,217 crore as of end-March 2025. The housing finance company faced challenges in two of its major markets — Karnataka and Telangana — in FY25. Business in Karnataka was affected by delays in the registration of property sale transactions. The issue with e-Khata, a digitised version of certificates providing property owners with a secure online platform, has since been resolved. In Telangana, where the issue was more sentiment-driven and the base was already lower, Iyer said, 'While we may not go back to the old numbers, there will definitely be growth.' Referring to the easing interest rate cycle, Iyer said liquidity is ample and the Reserve Bank of India has already cut the policy repo rate by 50 basis points. Another 50-basis-point cut is anticipated. Once the company sees a reduction in its cost of funds, it expects to pass on 35–50 basis points of benefit to customers, subject to market conditions. On the liabilities side, the company sources 55 per cent of its funds from the banking sector and another seven per cent through commercial papers. 'So whenever rates come down, over 60 per cent of our liabilities get repriced, creating room for passing on benefits,' Iyer added.
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Business Standard
24-04-2025
- Business
- Business Standard
Why are Can Fin Homes shares down 3% after Q4 results? All you need to know
Can Fin Homes share price today: Shares of housing finance company Can Fin Homes fell over 3 per cent to hit an intraday low of ₹716 on Thursday after the company reported its March 2025 quarter (Q4FY25) results. At 13:11 PM on Thursday, Can Fin Home's stock was quoting at ₹717.05, down 3.74 per cent on the National Stock Exchange (NSE). In comparison, the benchmark Nifty50 index was trading at 24,277, down 51.75 points or 0.21 per cent. The stock has fallen around 24.50 per cent from its 52-week high of ₹951.75 touched on September 13, 2024. The housing finance company's total market capitalisation stood at ₹9,591.09 crore. Can Fin Homes Q4 FY25 result update The company reported profit after tax (PAT) of ₹234 crore in Q4 FY25, up 10 per cent compared to ₹212 crore in the previous quarter. Its total loan portfolio grew 3 per cent Q-o-Q to ₹38,217 crore from ₹37,155 crore in Q3 FY25. Net interest margin (NIM) slightly improved to 3.82 per cent in Q4 FY25 from 3.73 per cent in Q3 FY24. Can Fin Homes reported net interest income (NII) of ₹349 crore, up 6 per cent compared to ₹328 crore in the Q3 FY24. Its gross non-performing assets (NPA) ratio increased to 0.87 per cent in the March 2025 quarter compared to 0.92 per cent in the year-ago period. However, the net NPA ratio slipped to 0.46 per cent from 0.50 per cent in Q4 FY24. The board of directors recommended a final dividend of ₹6 per share against a face value of ₹2 per share. This is in addition to the already declared interim dividend of ₹6 per share, taking the total FY26 dividend to ₹12. Motilal Oswal Financial Services (MOFSL) on Can Fin Homes The company reported a decent quarter as earnings came in line with the estimates on the back of the lower effective tax rate. Disbursements witnessed strong momentum on a sequential basis and asset quality also improved marginally. However, net interest margins declined by 10 basis on a sequential basis, the brokerage said in a research note. "Can Fin Homes might look to use its margin levers to deliver stronger loan growth in FY26. We may revise our estimates and target price (TP) after the earnings call on April 24, 2025," it added. About Can Fin Homes Can Fin Homes is a housing finance company promoted by Canara Bank. It is incorporated under the Companies Act, 1956. The company's loan book comprises 89 per cent of housing loans and 11 per cent of non-housing loans. It has a pan-India presence with 216 branches, 18 Affordable Housing Loan Centres (AHLCs), and 234 outlets in more than 100 cities across 21 states and Union Territories. It is one of the very few housing finance companies permitted by the National Housing Bank to take deposits from the public.
Business Standard
24-04-2025
- Business
- Business Standard
Can Fin Homes standalone net profit rises 11.91% in the March 2025 quarter
Sales rise 7.74% to Rs 998.58 crore Net profit of Can Fin Homes rose 11.91% to Rs 233.92 crore in the quarter ended March 2025 as against Rs 209.03 crore during the previous quarter ended March 2024. Sales rose 7.74% to Rs 998.58 crore in the quarter ended March 2025 as against Rs 926.83 crore during the previous quarter ended March 2024. For the full year,net profit rose 14.18% to Rs 857.17 crore in the year ended March 2025 as against Rs 750.70 crore during the previous year ended March 2024. Sales rose 10.08% to Rs 3878.26 crore in the year ended March 2025 as against Rs 3523.06 crore during the previous year ended March 2024. Particulars Quarter Ended Year Ended Mar. 2025 Mar. 2024 % Var. Mar. 2025 Mar. 2024 % Var. Sales 998.58926.83 8 3878.263523.06 10 OPM % 91.7992.49 - 92.2490.83 - PBDT 283.28274.12 3 1090.35970.25 12 PBT 279.16269.96 3 1077.48957.54 13 NP 233.92209.03 12 857.17750.70 14
Business Upturn
24-04-2025
- Business
- Business Upturn
Morgan Stanley retains overweight on Can Fin Homes with Rs 800 target after Q4 PAT beats estimates
By News Desk Published on April 24, 2025, 09:07 IST Morgan Stanley has maintained an overweight rating on Can Fin Homes, with a target price of Rs 800, following a stronger-than-expected performance in the fourth quarter of FY25. Profit after tax (PAT) stood at Rs 2.4 billion , coming in 8% above Morgan Stanley estimates. Pre-provision operating profit (PPOP) rose 8% YoY , which was 1% higher than estimates. The PAT beat was primarily driven by a lower tax rate . Loan growth was reported at 9% YoY and 3% QoQ . Disbursements came in at Rs 24.6 billion , reflecting a 31% YoY and 6% QoQ increase, aligned with the company's guidance. The brokerage noted that the management's outlook on FY26 loan growth will be a key monitorable going forward. Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always consult with a qualified financial advisor before making investment decisions. News desk at
