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Axis Securities
CanFin Homes (Buy)
CMP: ₹360.15
Target: ₹405
Can Fin Homes’ Q4FY20 results were better than expectations on operational front aided by strong net interest margins and benign asset quality. Net interest income/ PPOP (pre-provision operating profit) was up 34/38 per cent y-o-y with stable G/NNPA at 0.8/0.5 per cent. Loan book under moratorium is about 29/28 per cent customer wise/ valuewise. Loan mix to be maintained at 71/29 per cent salaried/self-employed. Of the salaried, 50 per cent is to PSUs. Developer loans are just ₹6 crore. Liquidity position remains comfortable. Company is also looking to raise capital in the near future.
Lower cost of funds will support net interest margin coupled with favourable loan mix and strong capital adequacy ratio keeping performance outlook largely stable for the company, despite growth headwinds in FY21.
We recommend ‘buy’ with a target price of ₹405 (2x FY22ABV).
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