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ICICI Direct Report
Can Fin Homes Ltd. was promoted by Canara Bank in 1987, with ~30% stake as of September 2022. The housing finance company is spread across 204 locations across 21 states and union territories with south contributing ~72% of loans and focus on tier II and III cities.
Key triggers for future price performance:
Rising demand for own house, improved affordability, government support (Pradhan Mantri Awas Yojana) and low mortgage penetration in India remain catalysts for sustainable growth in the housing finance segment.
Can Fin Homes' focus on non-metro cities (pre-dominantly tier II and III cities) with relatively lower competitive pressure and well defined process oriented credit disbursement is seen aiding business growth with low risk volatility.
The management's comment in the recent past with increasing proportion of loan against property to further support assets under management and net interest margin trajectory.
Strong parentage and consistent superior asset quality enables it to keep cost of funds lower and leverage higher, thus enabling better margins and return on equity.
Stringent cost control with cost-to-income ratio at 16-17% ensures continued focus on maximising productivity, which, in turn, would benefit earnings trajectory.
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