Can Fin Homes Q3 Results Review - Steady Quarter; Outlook Continue To Remain Healthy: Systematix

Systematix Report

Can Fin Homes Ltd.'s Q3 FY24 operational performance was broadly in-line with our estimates. Higher provisions during the quarter were offset by lower opex. Net interest income/operating profit came in at Rs 3.3 billion/Rs 2.8 billion versus estimate of Rs 3.2 billion / Rs 2.7 billion.

NII reported a healthy growth of 31% YoY / 4% QoQ led by marginal expansion in net interest margin (5 basis points QoQ) though the assets under management growth was moderate at 13.1% YoY (2.1% QoQ).

The decline in new loan approvals (-3% QoQ / -21% YoY) and sluggish disbursement growth (-23% YoY / -7% QoQ) was primarily on account of centralization of process.

However, despite higher-than-expected provisioning, profit after tax was in-line at Rs 2 billion. Gross non-performing assets/ net non-performing assets ratio deteriorated to 0.91%/0.49% from 0.76%/0.43% in Q2 due to slippages from restructured book.

We estimate a 14% compound annual growth rate in Can Fin Homes AUM to deliver 19% CAGR in earnings over FY23‐25E.

We expect the return of assets / return of equity to remain largely stable at 2.1%/18.5% over FY24/25.

Key risks: Inflation pressure might impact the demand for home loans.

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