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Can’s Q2FY25: Profitability Boosted by Enhanced Operating Efficiency
Equities, Markets, Research, Research Reports, Result Updates - October 23, 2024

Can’s Q2FY25: Profitability Boosted by Enhanced Operating Efficiency

Can’s Q2FY25: Profitability Boosted by Enhanced Operating Efficiency

Company Name: Can Fin Homes Ltd | NSE Code: CANFINHOME | BSE Code: 511196 | 52 Week high/low: 952 / 680 | CMP: INR 885 | Mcap: INR 11,789 Cr | P/BV – 2.54

About the stock
➡️Can fin home is a housing finance company focused in South India, sponsored by Canara Bank. It offered lending product as Housing loan, top-up personal loan, Mortgage caters to both salaried professionals and self-employed individuals. The company’s focus is on medium ticket-size loans, with housing loans constituting a significant portion.

Loan book propelled on healthy disbursement growth
➡️Can Fin homes report a double digit growth in its loan book, growing 10% YoY (+3% QoQ) to 36,591 Cr backed by healthy disbursal during the quarter. This growth is attributed to sound growth in non-salaried segment contribute 29% of overall book, growing at 16% YoY (+6% QoQ) to 10,638 Cr. While salaried segment contribute 71% of overall book, growing at 7% YoY (+2% QoQ) to 25,930 Cr.

➡️Product wise in both segment (salaried & non-salaried) growth supported by home loan growing by 7% and 15% respectively. Home loan influence 79% of total book in Q2FY25 vs 77% of total book in Q2FY24. Remaining 20% allocate to top up loan, Mortgage and loan for site.

➡️Disbursement support the loan growth grew by 18% YoY while on QoQ basis report solid growth of 28% to stood at 2,381 Cr as of Q2FY25.

➡️Borrowing grew in line with the growth of loan book, grew 10% YoY to 33,790 Cr. Funding source followed as bank loan 60%, NHB 14%, NCD 18%, Commercial paper 7% and deposit 1%. Can’s borrowing cost can be lower in coming quarters due to the higher chances of rate cuts from RBI side as banks borrowing has major portion.

Book Growth (As on)  Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%)
Borrowing  33,790 30,628 10%
Loan Book 36591 33359 10% 35557 3%
Disbursement  2381 2019 18% 1853 28%
Salaried 
HL 23607 22067 7% 23245 2%
Top up PL 1121 1020 10% 1092 3%
Mortgage 950 843 13% 899 6%
Loan for site 213 184 16% 204 4%
Other  39 41 -5% 37 5%
Sub total 25930 24155 7% 25477 2%
As % of total  71% 72% -2% 72% -1%
Non – Salaried 
HL 8786 7656 15% 8357 5%
Top up PL 548 437 25% 507 8%
Mortgage 1144 950 20% 1047 9%
Loan for site 109 87 25% 99 10%
Other  51 52 -2% 47 9%
Sub total 10638 9182 16% 10057 6%
As % of total  29% 28% 6% 28% 3%
Total  36,591 33,359 10% 35,557 3%

Profitability boom on operating leverage and lower provision
➡️NII grew moderate at7% YoY (+6% QoQ) to 340 Cr led by loan book growth yield remain flat. This moderate growth backed by flattish in yield while CoB jump 10 bps YoY result in contraction in NIMs. PPOP grew 25% YoY (+3% QoQ) to 288 Cr fueled by better operating efficiency (down 36% YoY). PAT up 34% YoY (+6% QoQ) to 211 Cr driven by lower provision.

Years (in Cr) Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%) Commentry
Interest income  955 865 10% 924 3% led by strong disbursement; yield flat
Interest expenses 615 548 12% 603 2%
NII 340 317 7% 321 6% backed by book growth; NIMS stable
Other income  7 6 28% 7 7%
Total Net income 347 323 8% 328 6%
Employee expenses 29 25 16% 23 24%
Other OpEx 31 67 -55% 26 20%
Total Opex  59 92 -36% 49 22%
PPOP 288 231 25% 280 3% driven by operating efficiency
Provision 14 33 -58% 24 -44%
PBT 274 198 38% 255 7%
Tax expenses  63 40 57% 55 13%
Tax rate  23% 20% 13% 22% 5%
PAT  211 158 34% 200 6% Healthy PAT fueled by lower provision. 
PAT% 22% 18% 21% 21% 2%
EPS 15.88 11.87 34% 14.99 6%
No. of equity shares  13 13 0% 13 0%

Asset quality show slight increment YoY while flattish QoQ
➡️Can’s asset quality slight degraded as GNPA/NNPA show increment by 12 bps/ 4 bps YoY to 0.88%/0.47%. While on QoQ basis remain flat. Can’s asset quality is lowered as 70% book given to salaried segment where chances of default is low. Provision coverage ratio stood at 46.41% as of Q2FY25.

Asset Quality Q2FY25 Q2FY24 YoY (bps) Q1FY25 QoQ (bps)
GNPA 0.88 0.76 12 0.91 -3
NNPA 0.47 0.43 4 0.49 -2

Valuation and key Metrics
➡️Currently the stock is trading at multiple of 2.55x BV 353 per share at CMP of 886 Rs. Yield on loan slight up 5 bps YoY and flat QoQ to 10.12% while CoB jump 10 bps YoY (- 2bps QoQ) to 7.56%. This result in decline in NIMs by 5 bps while expand 18 bps QoQ. 

Key metrics  Q2FY25 Q2FY24 YoY (bps) Q1FY25 QoQ (bps)
Yield 10.12 10.07 5 10.12 0
CoF 7.56 7.46 10 7.58 -2
NIMs 3.75 3.8 -5 3.57 18
ROAA 2.29 1.86 43 2.17 12
ROAE 17.99 15.96 203 17.57 42

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Business, Result Updates - July 22, 2022

CANF net profit at Rs.162.21Cr. in Q1FY23.

CANF net profit at Rs.162.21Cr. in Q1FY23.

Can Fin Homes Ltd. (CANF) declared its result on July 21st, 2022 for Q1 FY23. The company reported total revenue of Rs. 611.58 Cr. compared to Rs. 561.29 Cr. in the previous quarter. The net profit jumped to Rs. 162.21 Cr. for Q1 FY23, up by 31.96% QoQ.

The loan book reached Rs. 27538 Cr. with a clientele base of 2.15 lakhs, up by 24% in the current quarter YOY. The disbursements in Q1 stood at Rs. 1722 Cr. compared to Rs. 2705 Cr. in March 2022. In the June quarter, NII increased by 5.5% to Rs. 250.40 cr. The Net Interest Margin (NIM) decreased to 3.60% in June 2022 from 4.07% in the previous quarter. The average business was reduced by 0.63 bps to Rs. 146.48 crores per branch (vs. 147.11 crores on March 22). The cost/income ratio tanked from 19.84% to 15.84% in Q1 FY23 QOQ. The asset quality declined as GNPA increased by 5.39% and was recorded at Rs. 179.78Cr. this was Rs. 170.59Cr. on March 22. The NNPA was at Rs. 81.94 crores, or 0.30%. An increase in the cost of borrowing was witnessed at 5.80% on June 22 versus 5.66% in June 2021 and 5.56% in March 22, due to the hike in the interest rates by the RBI. The EPS was at Rs. 12.18 on June 22, compared to Rs. 9.23 on March 22 and Rs. 8.17 on June 21.
The average ticket size for incremental housing loans was Rs. 21 lakhs and for non-housing loans was Rs. 9 lakhs. The salaried and professional segments constitute around 74% of the O/S loan book. Housing loans were 90%, while non-housing loans were 10%.

CANF has better-quality assets among its peers, but we remain observant of seasonality in the portfolio that could lead to higher credit costs. They have achieved strong growth in the loan book and we expect a minimal spread/margin compression over the next few years. Though housing companies continue to face headwinds because of current macroeconomic situations, the NBFCs’ ability to maintain adequate liquidity, control asset quality, and diversification remains the key differentiator. With the continued growth in the loan book, CANF will witness robust growth. But due to the hike in interest rates, the NBFC will have weak demand for housing among the salaried, non-professional and self-employed classes. However, the expenses will go up due to aggressive branch expansion plans and operational costs. The NBFC has consistently increased its reserves and surplus to come out of uncertainty, which amounted to Rs. 3,040 Cr. in March 2022.

The stock is currently trading at Rs. 552, up by 11.25 points or 2.09%. It touched an intraday high of Rs.590 and a low of Rs.540. The 52-week high for the share price was at Rs.722, and the 52-week low was recorded at Rs.407

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