A Quarter Interrupted, Not Derailed

Can Fin Homes delivered what ICICI Securities fairly calls a mixed second quarter. The loan book rose about 10% to Rs 43,539 crore, net interest income climbed about 7% to Rs 431 crore and profit after tax advanced about 9% to Rs 275 crore. The blemish was origination: disbursements slid 7% year on year and 9% sequentially to Rs 2,373 crore, well short of the Rs 3,000 crore management had guided.

Management attributes about Rs 358 crore of the gap to the platform rollout. New property-legality checks in Telangana added friction, since resolved, while Karnataka has steadied at Rs 230 crore to Rs 250 crore.

Project Tejas: Installation Complete

The disruption frees capacity. The sales team should grow from about 90 to about 150 in FY27, mostly through redeployment, and 25 of 28 planned branches are open, though new branches need about 18 months to reach full productivity.

The Tap and the Drain

Plugging the drain matters as much as opening the tap. Rundown eased to Rs 1,795 crore from Rs 1,857 crore; after about Rs 655 crore in July, August and September each fell below Rs 600 crore. Prepayments had risen to 17% to 17.5% from a historical 15.5% to 16% as banks undercut on price. A narrower gap after the rate hike could trim prepayment by roughly Rs 400 crore a year.

Margins: Ahead of Guidance, Racing a Rate Hike

Yield edged up to 9.84% from 9.81% while borrowing cost rose to 7.03% from 6.98%, leaving the spread at 2.81% and NIM at 3.89%, both above guidance. After the 25-basis-point repo hike, management expects funding cost to rise 12 to 13 bps and has lifted home-loan rates 10 bps, with about 15 bps pencilled in for any further hike.

Asset Quality: A Software Quirk in the Overdue Book

Gross and net NPAs inched up to 0.90% and 0.42% from 0.87% and 0.40%, with gross NPA at Rs 392 crore. Delinquency rose to 8.41% from 8.01%, largely in SMA-0, partly because the new system computes overdues daily rather than at month-end. Credit cost stayed at about 9 bps, and the lender expects usual second-half recoveries to pull gross NPA lower.

Guidance Report Card

Signposts on the Road to 2028

Roadmap 2028 also targets a 60/40 South-to-rest-of-India disbursement split. ICICI Securities calls its execution, with a growth revival, the key re-rating trigger.

Estimates at a Glance

The Target, Run Through a Loan Calculator

ICICI Securities expects stable margins and benign credit cost to sustain RoA of about 2.3% and RoE near 17% through FY28. At Rs 750 the stock trades at about 1.3x FY28E adjusted book and 7.9x FY28E earnings, about 7% above its 52-week low. Investors may accumulate toward the Rs 900 target, treating the third-quarter disbursement print as the first proof of recovery.

Levels at a glance: Can Fin Homes · BUY (ICICI Securities) · CMP Rs 750 · Target Rs 900 (earlier Rs 1,050) · Upside 20% · 12 months · 52-week range Rs 700–972 · Basis ~1.5x FY28E book value.