Can Fin Homes: Posted 16.7% loan book growth; Buy

CD Equisearch Pvt Ltd | April 26, 2019, 10:37 a.m.

Valuation

Deteriorating asset quality with Gross and Ne t NPA of 0.7% and 0.5% respectively cannot be overlooked. Although it has been trying to diversify its regional presence to address markets in several cities, it still derives most of its business (over 72% of its loan book) from south India, where any slowdown impacts its business growth, as witnessed in last two fiscals. Rising competition from banks and liquidity crisis would hold NIMs in the range of 3.2%-3.3% in FY19 and FY20 respectively. Weighing odds, we recommend buying the stock with target price of Rs 417 (previous target Rs 432) based on 2.8x FY20e BV for a period of 9-12 months.



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