Can Fin Homes zooms 8% after stellar Q2FY25 results, Jefferies says 'Buy'

Shares of Can Fin Homes, the housing finance subsidiary of Canara Bank soared 7.8 per cent at Rs 898 per share on the BSE in Wednesday’s intraday deals. This came after the company posted strong quarterly earnings for the second quarter of the financial year 2024-25 (Q2FY25). 

Global brokerage firm Jefferies said that the company’s results were largely in line with its estimates but beat on the net interest income front, however, it was offset by tad higher opex.

Post the financial results, Jefferies has given a ‘Buy’ rating on the company’s stock with a target price of Rs 1020, implying 19 per cent upside from Tuesday's closing price. 

“Our price target of Rs 1,020 is based on a Gordon growth model (GGM) implied multiple of 2.1x P/BV Sept-2026e. Key downside risks include slowdown in loan growth; steeper fall in NIMs due to annual reset and sharper rise in interest rates; and deterioration in asset quality, including more-than- expected slippage from restructured book,” the brokerage said in its note. 

Financial print 

Can Fin Homes reported a strong financial performance for the second quarter ending September 30, 2024, with net profit rising by 33.8 per cent year-on-year to Rs 211.5 crore, up from Rs 158.1 crore in the same quarter last year.

Net interest income (NII) increased by 7.3 per cent, reaching Rs 339.8 crore compared to Rs 316.8 crore in Q2FY24. The gross non-performing asset (GNPA) ratio improved to 0.88 per cent in the September quarter, down from 0.91 per cent in June, while net NPA decreased to 0.47 per cent from 0.49 per cent quarter-on-quarter.

As of September 2024, Can Fin Homes' loan portfolio stood at Rs 36,591 crore, reflecting a 10 per cent increase from Rs 33,359 crore a year earlier. Housing loans comprised 77 per cent of the loan book, with non-housing loans, including commercial real estate, making up the remaining 23 per cent.

Loan disbursements for Q2 FY25 reached Rs 2,381 crore, marking an 18 per cent increase from Rs 2,019 crore in Q2 FY24 and a sequential growth of 28 per cent compared to Q1 FY25. The company maintained a robust liquidity position, with a liquidity coverage ratio of 166.06 per cent, well above the required minimum of 70 per cent, and documented undrawn bank lines totaling Rs 5,440.77 crore as of September 30, 2024.

The company has a total market capitalisation of Rs 11,772.16 crore. Its shares are trading at a price to earnings multiple of 14.46 times and at an earning per share of Rs 57.59. 

At 2:08 PM, the stock price of the company pared most of its gains and was up 6.09 per cent at Rs 883.70 a piece on the BSE. By comparison, the BSE’s Sensex rose 0.20 per cent to 80,382.82 level.