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Attracted by associate company Can Fin Homes’ robust top0line and bottom-line growth as well as the rising dividend trajectory, Canara Bank is planning to up its stake in the company by up to 5 per cent every year over the next few years.
In the last eight financial years, CFHL’s loan book and net profit have increased at compounded annual growth rates of 23 per cent and 17 per cent, respectively.
As of June-end 2015, the Bengaluru-headquartered public sector bank owned 43.46 per cent stake in CFHL, which the bank had promoted in 1987.
Shareholding structure Besides Canara Bank, which is the single largest shareholder, the other large shareholders include Chhattisgarh Investments (14.33 per cent), Catamaran Management Services Pvt Ltd (3.11 per cent) and Mushin Infrastructure Pvt Ltd (3.07 per cent).
According to B Harideesh Kumar, Executive Director, Canara Bank, CFHL in line with its increased profitability has been declaring attractive dividends over the last few years.
Moreover, the housing finance company has shown robust loan growth and its non-performing loans are close to nil. Hence, the bank plans to gradually step up stake in its associate company.
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, currently provide for consolidation of holdings through creeping acquisition of 5 per cent in a financial year by persons holding above 15 per cent but below 55 per cent. Persons holding 55 per cent and more cannot acquire further shares unless they make a public announcement to acquire further shares.
Profit and loan books Over the last couple of years, CFHL’s net profit nearly doubled to ₹32.10 crore (from ₹16.51 crore as of June-end 2013). The loan book too, more than doubled to ₹8,717 crore (₹4,310 crore), respectively.
Dividend in percentage terms has moved up in each of the last five financial years, from 25 per cent in FY2011 to 70 per cent in FY2015.
CFHL has pan-India presence with 109 branches and 27 satellite offices in over 19 States/Union Territories. The four southern States accounted for 75 per cent of its loan book.
The average ticket sizes of Can Fin Homes’ housing loan and non-housing loan are ₹18.85 lakh and ₹11.60 lakh, respectively.
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