Can Fin Homes - Q1 FY22 Result Report - YES Securities

(Rating: BUY, TP: Rs 650, Upside: 22.1%)

Growth delivery is key for re-rating; retain BUY

- The earnings miss (PAT 5% lower than our estimates) came from a weak NII performance, due to a sharp 40bps qoq decline in NIM. Margin was impacted by large quantum of back-book re-pricing from anniversary resets.

- Can Fin believes that its Spread/NIM (2.4%/3.3%) has troughed out and would improve in ensuing quarters.

- On asset quality, company's estimate of 1.5-2% restructuring could deject the street. After earmarking for likely restructuring, the additional provisions decline to Rs330mn (15 bps of loan assets).

- We see a combination of 12-14% growth, 3.2-3.4% NIM and 1.8-2% RoA plausible for Can Fin over FY21-24. Surpassing our growth expectation could trigger a re-rating in the stock which is currently trading at 2x FY23 P/ABV.

- Downside support to current valuation exists from a robust balance sheet, healthy contingency provisioning buffer and strong Tier-1 capital of 24% (DER 7.4x).

Shares of CAN FIN HOMES LTD. was last trading in BSE at Rs. 546.15 as compared to the previous close of Rs. 558.05. The total number of shares traded during the day was 37681 in over 1719 trades.

The stock hit an intraday high of Rs. 568.8 and intraday low of 542.5. The net turnover during the day was Rs. 20943479.

Source : Equity Bulls

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