• Fri. Dec 1st, 2023

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Analysts retain ‘Buy’ rating on Can Fin Homes shares

The appointment of Suresh Iyer as the new MD & CEO at Can Fin Homes is a positive development for the mortgage lender’s shares, as it removes overhang of a key management position lying vacant since September 2022, analysts said.

Iyer was appointed as Can Fin Homes chief on March 18 for a period of three years, which could be extended by a further period of two years after review. Prior to joining Canara Bank backed Can Fin Homes, Iyer worked in Gruh Finance for over 25 years and had become a part of its core management team early in his career. Iyer succeeds Girish Kousgi, who resigned from Can Fin Homes in September last year due to “personal reasons”. Kousgi went on to become MD & CEO at PNB Housing Finance head in October.

“MD & CEO appointment (at Can Fin) is positive as it removes overhang of a key management position lying vacant and increases business focus to aid loan growth,” brokerage Prabhudas Lilladher said in a recent note. The brokerage retained its ‘Buy’ rating for Can Fin Homes’ shares, and left target price unchanged at Rs 700 per share. Can Fin Homes shares ended trading flat, at Rs 531.55 per share on the BSE on Tuesday.

“We believe this is a positive given Mr Iyer’s long experience in the mortgage industry including as core management at Gruh Finance. The news is not a big surprise given media speculation around his appointment in recent months,” analysts at Jefferies said, retaining their ‘Buy’ rating on the stock.

Commentary from new management on growth strategy and managing margins would be the key watchable, the brokerage said, adding it would be “interesting” to see whether Iyer plans any changes in target customer segment and geographies.

“…Our channel feedback suggests Can Fin has seen rise in attrition at branches and mid management levels in the last six months. Disbursement growth at Can Fin also moderated in 3QFY23 (-1.1% YoY). Thus near term, Mr. Iyer would have to manage attrition, hire to plug in the gaps, and energize the team to drive growth,” Jefferies said.

As on December end, Can Fin Home’s loan book stood at Rs 30,115 crore, up 20% year-on-year (YoY). Average ticket size of incremental housing and non-housing loans was at Rs 24 Lakh and Rs 8 lakh, respectively, during Q3FY23. Speaking to FE, Gaurav Jani, research analyst at Prabhudas Lilladher, said the new MD & CEO’s strategy from hereon on growth will be keenly watched by market participants.

“Q4 conference call will be a key monitorable post results…assuming that he is aggressive on growth and probably would also look at different segments… they should not compromise on asset quality or profitability… Typically, the kind of customers Can Fin caters to, they have a ticket size of Rs 10 lakh-25 lakh largely, so probably they could look at lower ticket size provided asset quality is not compromised,” Jani said.

As on December 31, Can Fin Homes gross and net non-performing asset ratio stood at 0.60% and 0.30%, respectively. Further, Jani said Can Fin Home’s spreads, which have compressed to 2.24% in October-December from 2.59% in previous year, will remain stable to slightly higher going ahead, as repricing of loans is yet to be completed fully.


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