Can Fin Homes - Q2FY22 First Cut - YES Securities

Growth in-line, margin recovers and restructuring higher

• A 5% beat on NII and 10% beat on PPOP - margin expansion and lower cost were key drivers
• Reports a positive provision due to write-backs - PAT 15% higher than our estimate
• Loan growth at near 6% qoq and 13% yoy in marginally ahead of expectations - management had indicated around Rs20bn disbursements in the quarter previously
• Indicative loan spreads are higher 15-20 bps qoq - driven by a) significant increase in start lending rates by 125-130 bps during H1 FY22 and b) further softening in CoF
• Restructuring 2.0 at Rs5.7bn (v/s 1.0 at Rs0.77bn), equivalent to 2.5% of the loan portfolio - this is higher than guidance given in previous earnings call of 1.5-2% of loan assets
• The unutilized additional provisions of Rs126mn and provisions of Rs3mn wrt. Restructured 1.0 accounts which got closed were written-back in Q2
• Cash + Inv. on BS has increased from Rs0.7bn to ~Rs4bn in H1 FY22

Our view

• Benefits of competitive rates and unutilized provisions are behind.
• Margin should further recover in Q3, but key monitorables would be a) momentum in disbursements, b) quality of growth/customers and c) quantum of BT out
• Can Fin now has loans starting from 8.25% v/s peers (who target similar customer profile) at 6.5-7%
• Stock trades at 2.7x FY23 P/ABV - a relative underperformance could ensue on expectations of growth and portfolio quality getting impacted over time due to uncompetitive rates

Shares of Can Fin Homes Limited was last trading in BSE at Rs. 657.30 as compared to the previous close of Rs. 698.95. The total number of shares traded during the day was 183724 in over 7070 trades.

The stock hit an intraday high of Rs. 697.45 and intraday low of 634.00. The net turnover during the day was Rs. 120275640.00.

Source : Equity Bulls

Keywords

CanFinHomes INE477A01020 HousingFinance YESSecurities Q2FY22 FirstCut