Q3 FY21 Result Update - CANFIN Homes - YES Securities

(Rating: BUY, Target: Rs 615, Upside: 28.4%)

A decisive improvement in growth commentary

- The management commentary pertaining to growth decidedly turned positive. The confidence on growth comes from robust disbursements in December, strategic reduction in loan pricing and strong pick-up in housing demand in affordable and lower-middle segments. Management has guided towards achieving steady 16-18% disbursement and portfolio growth in 6-8 quarters.

- Though the current pricing strategy would correct margin and spreads in ensuing quarters (guidance of sustainable NIM/Spread of 3%+/2.3%), the hit at the RoA level will cushioned by normalization of credit cost.

- We estimate growth rebounding to 13-14% in FY22 after a delivery of 5% in the current fiscal. RoA will come-off a little on margin reduction, while RoE will be constricted by stable leverage. We have not factored capital raise as its timing remains difficult to predict. Current valuation at 1.9x FY23 P/ABV is amenable to re-rating with improvement in growth prospects.

Shares of CAN FIN HOMES LTD. was last trading in BSE at Rs.478 as compared to the previous close of Rs. 481.7. The total number of shares traded during the day was 57507 in over 3077 trades.

The stock hit an intraday high of Rs. 502.95 and intraday low of 455.3. The net turnover during the day was Rs. 27466033.

Source : Equity Bulls

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