Axis Securities maintains a 'Buy' rating on Can Fin Homes with a target price of Rs 915, citing an expected recovery in disbursement growth for H2FY27. Following the completion of the 'Project Tejas' IT migration, the company is set to scale its sales force and resume momentum. Investors should watch for the targeted 13-14% AUM growth as the firm maintains healthy asset quality with GNPA at 0.90%.
Can Fin Homes: Brokerage Retains Buy Rating, Targets Rs 915
Target Price: Rs 915 | CMP: Rs 735
Reader Takeaway: Brokerage eyes H2FY27 disbursement recovery post-IT transition, despite a slight temporary dip in recent quarterly volumes.
What just happened
Axis Securities has reaffirmed a 'Buy' rating for Can Fin Homes, setting a price target of Rs 915, which implies a 24% potential upside from the current market price of Rs 735. The update follows the company's Q2FY27 performance, where Net Profit grew 9.2% YoY to Rs 275 crore. Net Interest Income also saw a rise of 6.7% YoY to Rs 431 crore.
Why this matters
Disbursements for the quarter fell by 6.8% YoY to Rs 2,373 crore, largely due to the phased rollout of the 'Project Tejas' IT platform. Management confirmed that branches affected by the rollout saw a temporary 70-75% dip in disbursements during the implementation phase, which has since recovered. With the IT migration now successfully completed, the company is shifting focus toward aggressive sales team expansion, aiming to increase headcount to 150 employees this year and 250 by FY28.
Management Commentary and Guidance
Management remains optimistic, retaining its FY27 AUM growth guidance of 13-14%. Looking ahead, the company targets 15-16% AUM growth for FY28. To preserve margins amidst rising costs of funds, Can Fin Homes has implemented a 10bps hike in housing loan rates. Margins are expected to hold steady at 3.75% for the current fiscal year.
Risks to watch
While the outlook is positive, the brokerage identifies a potential slowdown in overall credit demand as a primary risk. Any failure to maintain earnings momentum due to broader market credit constraints could impact the valuation targets.
Context Metrics
- GNPA: 0.90%
- NNPA: 0.42%
- FY27 Disbursement Target: Rs 13,000 Cr
What to track next
Investors should monitor disbursement data in Q3 and Q4 to confirm the anticipated recovery trend. Further updates on the sales force expansion and its impact on loan sourcing will be critical for achieving the FY28 growth targets.