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Can Fin Homes Q3 Results Review - Better Quarters In Store: Yes Securities

Low disbursement and higher slippages underwhelming; resilient margin and strong profitability positives.

<div class="paragraphs"><p>Can Fin Homes Ltd. branch in Sangareddy, Bengaluru. (Source: Company website)</p></div>
Can Fin Homes Ltd. branch in Sangareddy, Bengaluru. (Source: Company website)

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Yes Securities Report

Can Fin Homes Ltd.'s Q4 FY24 performance was characterised by expectedly modest originations (process changes/tightening), larger-than-expected non-performing loan increase (flow from non restructured was marginally higher) and better-than-expected margin performance (Spread/Net interest margin improved QoQ).

Hence, even while disbursements were lower and credit cost was higher than our expectations, the NIM/pre-provision operating profit/profit after tax were 3-5% higher than estimates.

With portfolio run-off rate stable, the loan portfolio grew by 2% QoQ/13% YoY, marking a significant moderation from 18% growth rate couple of quarters back.

Portfolio NIM improved further by 7 basis points to 3.69% on the back of improvement in portfolio yield (10.01% versus 9.93%) with repricing of residual book (~Rs 67 billion). Incremental Portfolio Yield was 9.91% and Incremental cost of funds was 7.35%, and hence Incremental Spread was 2.6%.

Gross non-performing loans increased by 21% QoQ (level rose from 0.76% to 0.91%) due to significant slippages from restructured portfolio and seasonal increase in slippages from non-restructured book.

Higher slippages drove higher-than-usual credit cost at 37 bps. Management overlay provisions of Rs 340 million were not utilised by the company.

Return on assets/return on equity for the quarter was strong at 2.3%/19.4%.

Click on the attachment to read the full report:

Yes Securities Can Fin Home Q3 FY24 Results Preview.pdf
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