Can Fin Homes shares rally 6% post Q3 results. Brokerages have ‘Buy’ rating
1 min read . Updated: 23 Jan 2023, 02:00 PM IST
Premium- As per the company, net interest margin (NIM) for Q3 FY23 has bottomed out and could improve from hereon, highlighted analysts
Shares of Can Fin Homes Ltd rallied more than 6% to ₹554 apiece on the BSE in Monday's trading session as the company's net profit rose to ₹151 crore for the third quarter ended December 2022 as compared to ₹115 crore in the year ago quarter.
“Can Fin Homes reported a stable quarter driven by higher net interest income (NII) and lower provisions as AuM growth at around 20% YoY was in-line. Company expects disbursal momentum to improve in Q4 while it envisages a loan growth of 20% in FY24E. As asset quality risks are receding, share of self-employed is gradually rising and over the medium term, it could increase from 26% to 30%," highlighted Prabhudas Lilladher.
As per the company, net interest margin (NIM) for Q3 FY23 has bottomed out and could improve from hereon. While NIM remains a key monitorable, only 28% of assets have been repriced to Reserve Bank of India (RBI) rate hikes compared to 65-70% of liabilities. This suggests that overall NIM for FY24 could be higher vs FY23 and NII growth could surpass loan growth, highlighted the brokerage.
“We see FY24 NIM at 3.3% (vs 3.24% in FY23). OTR pool is at ₹7 bn or 2.3% (provision coverage ratio or PCR of 10%); while repayment has not started, 30% customers have started repaying. On MD&CEO succession, new candidate is expected to join before FY23 end," the brokerage has maintained its ‘Buy’ rating on the stock with a target price of ₹700.
“Key takeaways of this quarters’ performance were a) further acceleration in SENP HL growth (book grew by 22% yoy, a significant improvement from 8% yoy a year back), b) more-than-expected compression in NIM/Spread, and c) benign credit cost underpinned by sustained strong asset quality trends. Co. expects continuance of sturdy loan growth with controlled BT Out, and stable-to-improved margins in the medium term," said brokerage Yes Securities which also has a Buy rating on the stock with a target price of ₹680.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
