Can Fin Homes revamping top management; new CEO before end of Dec

Mortgage lender may raise equity capital before closing Q4 of FY23

The top deck at mortgage lender Can Fin Homes Ltd will have a makeover in the next few months as new chief executive officer, chief finance officer and chief risk officer come on board.

The company is searching for one and a new CEO is expected to take charge before the end of the current quarter (December 2022), officials said in an analyst call. Girish Kousgi, the CEO now, leaves office on October 20 after resigning due to personal reasons. He was appointed in September 2019.

Till a new CEO joins, the board has empowered the deputy managing director to run affairs, officials said.

Recruitment is underway to pick a CFO and a CRO, said the lender without giving a timeline for their appointment. The CFO and CRO now are both permanent employees and will continue in their role till new persons join.

Can Fin plans to raise capital before March 2023, the exercise being part of enabling quantum (approvals are in place to raise up to Rs 1,000 crore). Capital adequacy stood at 23.15 per cent at end of March 2022, well above the regulatory requirement of 15 per cent. However, the leverage ratio was expected to remain around eight per cent over a period of time. Lenders are comfortable with a debt to equity ratio (DER) of around 7-8 per cent and there is a need to infuse Tier-1 capital therefore.

It could use instruments like follow-on issue and Qualified Institutional Placement to increase the company’s Tier I capital. Canara Bank, the company’s state-owned promoter, held a 30 per cent stake as of September 2022.

Can Fin recorded a 14.62 per cent year-on-year (YoY) growth in net profit at Rs 141.71 crore for the second quarter ended September 2022 (Q2 FY23). Its net interest income (NII) grew by 30.97 per cent YoY to Rs 251.17 crore in Q2 FY23.  

Its loans grew by 22.23 per cent year-on-year (YoY) to Rs 28,482 crore at the end of September 2022. Its disbursements were up marginally at Rs 2,245 crore in Q2 FY23, up from Rs 2,208 crore in Q2 FY22. This was because performance was strong in the second quarter last year (Q2 FY22), which showed a spillover effect after it could not disburse much in the first quarter (Q1 FY22) due to the second wave of Covid-19. Sequentially, they rose by two per cent from Rs 1,722 crore in Q1 FY23. The disbursement is expected to maintain a pace of 18-20 per cent in the long term.

Its net interest margin (NIM) was stable at about 3.55 per cent. Can Fin has indicated that it will be able to maintain NIM of 3.0 per cent on a steady state basis and able maintain that at 3.5 per cent level for next few quarters.