Can Fin Homes Ltd Expected to Rise by 10% to Rs 957 Amid Growth in Key Regions

Can Fin Homes Ltd, a housing finance firm in the BFSI sector, is projected to rise by 10% from its current market price, reaching Rs 957 within 6-9 months. Axis Securities' analysts attribute this potential increase to improved growth prospects in key regions, excellent asset quality with low credit costs, and a stable margin trajectory.

Axis Securities' analysts have outlined several reasons for investing in Can Fin Homes shares. The company is witnessing a gradual recovery in its primary markets, Karnataka and Telangana. In Karnataka, management anticipates an increase in monthly disbursement rates starting from the third quarter, aiming for a Rs 300 crore monthly disbursement rate by the fourth quarter.

Can Fin Homes is experiencing robust growth in the Eastern and Northern states, exceeding 30%, while Tamil Nadu and Western states are showing strong growth at 25%. The company aims to boost its Assets Under Management (AUM) growth to 15% over FY27/28E.

The company has improved its cost of funds management by shifting from MCLR-linked loans to EBLR-linked loans. Can Fin Homes does not plan to adjust rates but may consider a 10 basis points reduction if there is another 25 basis points repo rate cut. They have set a guidance for Spreads/NIMs at 2.75/3.75% for FY26.

Axis Securities' analysts expect Can Fin Homes to achieve a Return on Assets (RoA) and Return on Equity (RoE) of 2.2-2.3% and 16-18% over FY27-28E. This will be driven by enhanced growth visibility, a healthy Net Interest Margin (NIM) profile, and controlled credit costs supported by stable asset quality.

Valuation and Growth Projections

The company is projected to deliver healthy AUM, Net Interest Income (NII), and earnings growth of 15%, 13%, and 12% CAGR over FY26-28E. Currently trading at 1.7 times its FY27E Book Value (BV), Can Fin Homes presents a promising investment opportunity according to Axis Securities' research analysts.

"We expect RoA/RoE delivery of 2.2-2.3%/16-18% over FY27-28E, driven by (i) Improved growth visibility, (ii) Healthy NIM profile, and (iii) Controlled credit costs backed by stable Asset quality. We expect CANF to deliver a healthy AUM/NII/Earnings growth of 15/13/12% CAGR over FY26-28E. Valuation: Trading at 1.7x FY27E BV," said the research analysts of Axis Securities.

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