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Published: December 31, 2024
Updated: December 31, 2024

Can Fin Homes

Loans to touch Rs 10k cr in FY25

Mortgage lender Can Fin Homes, the housing finance company promoted by Canara Bank, has put up an extraordinary performance during Q2FY25 with a 34% spurt in net profit. Pre-tax profit stood at Rs 274 crore, reflecting a 38% yoy rise.

ndicating this at a conference call organized to discuss the Q2FY25 results, Suresh Iyer, Managing Director and CEO, added that “the company expects disbursements to touch Rs 10,000 crore in fiscal 2025. We are also targeting loan growth of 15-17% in fiscal 2026.”

Analysing the company’s performance during Q2FY25, Mr Iyer said that Can Fin Homes has posted a strong 34% surge in net profit to Rs 211.49 crore for the quarter ended September 2024. Interest income increased 11% to Rs 962.48 crore, while interest expenses rose 12% to Rs 615.50 crore. NII improved 8% to Rs 346.98 crore in Q2FY25. Operating expenses dipped 37% to Rs 56.58 crore, allowing the operating profit to jump 25% to Rs 290.61 crore. Depreciation moved up 1% to Rs 2.79 crore, while loan loss provisions plunged 58% to Rs 13.74 crore in Q2FY25. PBT jumped 38% to Rs 274.09 crore. The effective tax rate rose to 22.8% in Q2FY25 from 20.2% in Q2FY24.

P.A.T. FACTOR

The final bottomline of the company increased 34% due to growth in net profit to Rs 211.49 crore in Q2FY25. The book value stood at Rs 353.1 per share at end-September 2024, while the adjusted book value, net of net NPA and 10% of restructured loans, stood at Rs 340.2 per share at end-September 2024. According to Mr Iyer, the company has recorded strong sequential growth in disbursements as well as sanctions in Q2FY2025. Disbursements have increased by 28% on a sequential basis and by 18% over the previous year.

The company has indicated some challenges for performance in states such as Andhra Pradesh and Telangana in Q1. While Andhra Pradesh has exhibited a turnaround in Q2FY25, Telangana is going slow on account of issues such as registration and demolition of unauthorized properties.

LOAN TARGET

According to him, Can Fin Homes has accelerated loan growth to 10% at end-September 2024 from 9% at endJune 2024. It expects to further accelerate loan growth to 11-12% by December 2024 and 13-14% by March 2025. The yield on loans was stable at 10-12%, while the company has exhibited a reduction in cost of borrowing, in line with expectations, helping to improve spreads by 2 bps. Credit cost has moderated in Q2FY25 as NPAs have declined. The company expects credit cost at 10-12 bps for FY25. It has witnessed some increase in operating expenses on account of promotions given during Q2, increase in actuarial expenses by Rs 3 crore on account of a decline in bond yield, and higher legal expenses due to a rise in SARFAESI recoveries of Rs 1 crore. The company has raised advertising expenses and social media expenses, incurring Rs 80-90 lakh.

Pointing out that “the company does not expect any deterioration in its spread,” Mr Iyer added that it has a good amount of sanctions with better yields. The company has also received a refinance sanction from NHB which is at a lower rate than the existing cost of borrowings. It is maintaining the spread guidance of 2.5% and the net interes margin guidance of 3.5%. The SMA 1 and 2 loan book has increased by Rs 100 crore in Q2 and the company is focusing on resolving this stress in Q3. Bank borrowings linked to the repo rate stand at 45%, MCLR at 35% and balances are linked to T bills, etc. The share of MCLR-linked borrowings has reduced from 40% to 35%. The company expects its disbursements to touch Rs 10,000 crore in FY2025. It is targeting loan growth of 15-17% for FY 2026.

MORE BRANCHES

Mr Iyer revealed that Can Fin Homes expects to add 15 branches in FY2025, which would be mostly in the northern and western parts of the country. It aims to raise the branch network to 300 branches by FY2028, and will continue to add 15-20 branches every year. The share of DSA (direct selling agent) challans in sourcing is expected to decline to 60% by FY2027 from the existing 80%. The share of LAP (loan against property) books stands at 5% and the company has scope to raise it to 7%. The average ticket size is Rs 25 lakh, which is expected to rise to Rs 27 lakh over the next year. The current mix between salaries and selfemployed is at 70-30, while the company will comfortable in raising the share of self- employed to 35%.