Can Fin Homes: Prabhudas Lilladher Sees 12% Upside to ₹1015 Target

REAL-ESTATE

Overview

Prabhudas Lilladher initiated an 'Accumulate' rating on Can Fin Homes, setting a target price of Rs 1,015. The brokerage anticipates loan growth of 11%-14% for FY26-FY27 and stable Net Interest Margins (NIMs) at 3.75%, driven by lower borrowing costs. However, investments in business expansion are expected to keep the cost-to-income ratio elevated.

Loan Growth Outlook

Prabhudas Lilladher projects Can Fin Homes will achieve loan growth of 11% and 14% in FY26 and FY27, respectively. This follows a 10% year-on-year increase in its loan book during the third quarter. The firm noted a pick-up in disbursements during Q3, with a positive run-rate observed in Karnataka and Telangana.

Margin and Cost Pressures

Net Interest Margins (NIMs) are expected to trend in line with guidance at 3.75% for FY26 and FY27, benefiting from a lower cost of borrowing. However, the cost-to-income ratio is forecast to remain elevated at approximately 18% between FY26 and FY28. This increase is attributed to ongoing investments in business transformation and expansion initiatives.

Valuation and Recommendation

Despite revising FY26 and FY27 estimates upward due to a positive margin trajectory, the brokerage acknowledges that lower overall growth and elevated operating expenses are weighing on earnings. Can Fin Homes is valued at 2.0 times its December 2027 estimated Price to Adjusted Book Value (P/ABV). Based on this, Prabhudas Lilladher maintains an 'Accumulate' recommendation with a price target of Rs 1,015.

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