Can Fin Homes’ loan growth continues to remain tepid since FY24, given several headwinds such as state-specific issues, moderation in demand, and limited expansion in distribution.
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Can Fin Homes Ltd.’s Q2 FY26 earnings were ahead of our estimates, largely due to higher-than-expected net interest margins (4%) and muted credit costs (3bps).
NIMs reflated sharply, driven by lower cost of funds (-30bps QoQ) due to re-pricing of bank borrowings, while transmission on the asset side remained limited (25bps during FY26). However, AUM/disbursements growth remained tepid (+8.4%/+6.9% YoY) amidst moderation in overall housing demand and protracted issues in Karnataka and Telangana.
While Can Fin Homes remains upbeat about loan growth and margin prospects, led by branch additions (14 added in H1 FY26), product and customer diversification (loan against property, self-employed non-professional segment, etc.), and increase in share of direct sourcing (currently at ~7%), tepid loan growth remains a key monitorable for any rerating.
We revise our FY26/FY27E earnings estimates for higher NIMs offset by higher opex and maintain Buy with a revised RI-based target price of Rs 915 (implying 1.7x Sep-27 adjusted book value per share).
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