Can Fin Homes Share Price Target at Rs 900: Geojit Investments
Geojit Investments has issued a bullish call on Can Fin Homes Limited (CANF), forecasting robust growth and attractive valuations that present a compelling buy opportunity for investors. The housing finance company, affiliated with Canara Bank and predominantly active in South India, has exhibited healthy loan book growth, strong net interest income gains, and prudent provision strategies—underpinning confidence in its resilient performance. Despite slight softness in asset quality metrics, the management's proactive measures and favorable rate environments suggest a positive outlook. Geojit assigns Can Fin Homes a BUY rating with a revised 12-month price target of Rs. 900, indicating an upside potential of approximately 21% from the current market price of Rs. 745.
Loan Book Expansion and Client Growth Highlight
Can Fin Homes showcased solid momentum in its core lending business, with the loan book expanding by a noteworthy 9.0% year-over-year to Rs. 38,773 crore. The client base concurrently rose to 2.83 lakh, reflecting robust customer acquisition and sustained demand for housing finance products. This expansion is a testament to the firm’s deep presence in the southern Indian housing finance market and commitment to diverse loan offerings, including housing, mortgage, and commercial property loans.
Net Interest Income and Margins Remain Healthy
The company reported a 12.9% rise in net interest income (NII) to Rs. 349 crore during Q1FY26, underscoring efficiency in interest revenue generation. Although the net interest margin (NIM) slightly dipped to 3.6%, this is viewed as a transient effect, with guidance suggesting margins will remain broadly stable amidst an evolving interest rate landscape. Given Can Fin Homes’ strategic transmission of recent repo rate cuts—amounting to a 25 basis point total reduction spread over May and July—NIM stability is expected as customers’ reset cycles unfold.
Operating Costs and Provisioning Strategy
The cost-to-income ratio in Q1FY26 inched up, driven by a one-time actuarial impact from salary revisions plus higher rent expenses for expanded branch and zonal office infrastructure. Management anticipates normalization of this ratio to approximately 18% in FY26 and 19% in FY27, factoring in IT-related expenditures. Concurrently, the company tactically increased provisioning by 7.3% year-on-year to Rs. 26 crore as part of a deliberate cleanup of sticky accounts early in the fiscal year, signaling conservative risk management and legacy portfolio diligence.
Profitability and Asset Quality Overview
Can Fin Homes recorded a modest 12.1% increase in profit after tax (PAT) to Rs. 224 crore in Q1FY26 despite the provisioning uptick, demonstrating resilience in earnings quality. However, asset quality metrics showed a slight deterioration, with gross non-performing assets (GNPA) rising to 0.98% from 0.91% and net non-performing assets (NNPA) moving up to 0.54% from 0.49% year-over-year. The provision coverage ratio (PCR) declined marginally to 45.2% from 46.5%, underscoring the need for ongoing vigilance around credit risk.
Management Changes and Disbursement Milestones
In significant leadership developments, Mr. Abhishek Mishra assumed the role of Chief Financial Officer as of June 30, 2025, maintaining stability in the company’s financial stewardship. Can Fin Homes also achieved an unprecedented milestone by surpassing Rs. 2,000 crore in quarterly disbursements—a 9% year-on-year increase—highlighting operational strength and market penetration. The company targets total disbursements of Rs. 10,500 crore for FY26, with Q2 alone projected to contribute Rs. 2,500–2,600 crore.
Guidance and Valuation Metrics
The management’s forward guidance outlines stable financial ratios with expected NIM around 3.5%, a credit spread of 2.5%, return on assets (ROA) at 2.2%, and return on equity (ROE) near 17.0%. Geojit’s valuation model applies a 1.8x price-to-book multiple on FY27 estimated book value per share (BVPS), leading to a revised target price of Rs. 900. Based on the current market price of Rs. 745, this translates into an anticipated return of 21%.
Financial Snapshot and Key Ratios
| Metric | FY25 (Actual) | FY26 (Estimate) | FY27 (Estimate) |
|---|---|---|---|
| Net Interest Income (Rs cr) | 1,354 | 1,533 | 1,690 |
| Growth % (NII) | 7.6% | 13.2% | 10.2% |
| Net Interest Margin (NIM) % | 3.5% | 3.6% | 3.5% |
| Adjusted PAT (Rs cr) | 857 | 939 | 1,044 |
| Adjusted PAT Growth % | 14.2% | 9.6% | 11.1% |
| ROA % | 2.2% | 2.2% | 2.1% |
| ROE % | 18.2% | 17.2% | 16.6% |
| EPS (Rs) | 64.4 | 70.5 | 78.4 |
| BVPS (Rs) | 381 | 440 | 506 |
| P/E (x) | 11.7 | 10.6 | 9.6 |
| P/B (x) | 2.0 | 1.7 | 1.5 |
Key Risks and Market Dynamics
The affordable housing segment is undergoing a deceleration, attributed to diminished developer incentives and the limited scope of the PMAY 2.0 subsidy scheme that features stricter eligibility criteria and reduced geographic coverage. This scenario introduces potential headwinds for growth in this sector niche. Moreover, the moderate rise in asset quality stress calls for careful monitoring going forward.
Investor Takeaway and Trading Levels
With Geojit’s BUY recommendation anchored on solid fundamentals, attractive valuations, and proactive management strategies, investors are advised to consider accumulating Can Fin Homes shares in the current price band. The revised target price of Rs. 900 outlines a clear upside of 21% over the next 12 months. The stock presently trades near Rs. 745, with support levels anticipated around Rs. 650–700, creating favorable entry points for medium-to-long-term investors.
