Has Q2 result been announced?
Q1 results ( for the period from 1st Apr 2015 to 30th June 2015) were announced on 21st July. We are still in Q2 so there is no question of Q2 results being announced.
Cheers,
Krishna
Focus on high-yield loans, reducing funding cost: Can Fin
In an interview with CNBC-TV18, C Ilango, MD and CEO, Can Fin Homes said the company is looking to raise funds via non-convertible debentures (NCDs) and commercial papers (CPs).
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Good sound bites. However strange that Ilango doesnt have info of Canara Banks proposed stake increase that was disclosed in a press conference.
I have been trying to understand the plan of digitization of land records and its positive effect on property transactions and mortgage loans. It looks like many states have digitized major part of the land ownership records and people can take a printout of the ownership records from the state government websites, although the printouts do not have legal validity yet. The plan is to bring the digitization to a level where the printouts can work as a legal proof of ownership. This would bring down the inconvenience and cost of property transactions and should lead to better business for mortgage lenders like Can Fin and others.
My knowledge of the status of land ownership digitization programme and its possible impact on mortgage loans is rudimentary? Please share if you can add something to it.
Motilal comes with a target of 1100 as they initiate the coverage on this gem
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Interesting to note from Motilalās report above that Illangoās term has been extended till October 2016, and given that CanFin Homes now has 2400 crore market cap, which is more than 15% of Canara Bank market cap, it is likely that his term will get extended further.
Core banking software has been implemented across branches, significantly expanding branch network and low cost satellite offices across India, reducing interest rates should take care of growth going forwardā¦
CanFin continues to be the fastest growing HFC and is getting well recognized by the market participants though FII/ DII holding still continues to be <1%. With consistent growth and entry of institutional investors, stock could continue to make new highsā¦
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This looks like a no brainer stock, with everything going right for the stock and company
- Q1 result was superb as 70 % inc in profit, all four quarters are expected to be like this good.
- RBI rate cutting will further increase the profitability with NCD/CP financing increasing qoq
- NIMs will further improve as year passes by, cost of funds decreasing
- Stock is still illiquid and under owned/undiscovered to some extent by institutions
- Any fund getting in will lead to further rerating
- A growth of 30/35 % in itself is a huge growth with NIL NPA
- RBI reducing risk wt for housing loans will further help. Avg ticket size of 18 lakh is another positive.
Disc : invested
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Do you feel that Canfin Home stock prices has run ahead of its performance and its comfort of valuation is decreasing ?
Wouldnāt Ilango be truning 60 next year and retiring? Any idea about the provisions for extending service of retired PSU bank employees? How easy or difficult it is?
Recent interview - http://economictimes.indiatimes.com/et-now/corporate/demand-for-housing-is-slightly-subdued-canfin/videoshow/49166985.cms
Ayushji itās not opening can u Pl Give crux of itā¦
Very insightful interview. I think generally real estate investment is a bit subdued and housing demand to own is on track. Interesting to hear his confidence that it can grow 33% or better until 2020. May be its little bit on higher side of expectation. Nevertheless, I think they are doing all the right things, lowering the cost of funds, increasing the foot print, maintaining the NPAs and also maintaining spreads. Additional boost from uptick in economy, housing demand from smart cities and housing for all policy, will be boost.
Can anybody share how is their service quality compared to say something like ICICI, HDFC?
Has their efficiency increased? are they more electronic now than earlier? They had a very old style customer service earlier, also documentation wiseā¦These things are also equally important to stay ahead in the raceā¦
Disclosure: Invested since last 2 years.
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It is opening now. Thanks Ayush for sharing the url.
Salient points:
- RBI has reduced risk weight will result in reduction in cost of borrowing and hence conservation of capital, HFC will pass on benefit to borrower
- Avg ticket size 18 lakhs for home loand and 13 lakhs for loan against property
- Interest spread of 2 to 2.5% will be maintained
- They have increased borrowing from NCD/CP 9% to 37% and reduced from banks from 38% to 21% yoy. Further plan increase borrowing from NCD/CP to 50%. This will help margin expansion
- Business is as usual in Bangalore and Hyderabad. Subdued in NCR and Tamil nadu
- 95% borrowers are first time borrowers
- Current GNPA 0.17% NNPA 0%
- Aiming for Loan book growth to 35,000 crore by 2020
- Do not see need for raising capital till April 2017
Disclosure- have some exposure to canfin
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Still no institutional investors or FIIās have entered in Canfin.
@sunilsurana - about 22% stake is help by investors holding more than 1% of the equity. Catamaran fund (Mr. Narayan Murthyās investment arm) holds 3.64% stake.
Regards,
Ayush
If one assumes HFC ( low cost) to be valued on PE basis rather than PB, this looks even more undervalued.
With FY 16 expected to be bumper year due to above known discussed reasons, I estimate FY 16 EPS to be around 45 Rs, So for a steady business growing @ min 30 %, we can assign 30 PE, so it comes as around 1400, if one discounts FY 17 EPS as some analyst do in brokerage reports 
, fy 17 eps estimates is coming closer to 60, so it can be seen closer to 1800. I am aware this are lofty estimation, but its possible, we donāt know what Mr. M decides, as it did with Gruh/Repco. They are valued on PE basis not p/b.
On p/b it looks fairly valued now, but can still grow@ 30/35 %, which is rare these days for any financials with NIL NPA.
@ayushmit, Catmaran fund has further raised its stake during last Quarter from 3.1 % to 3.6 %
Disc : invested and views are biased
i expect can fin to report 34-36 cr. of PAT in q2 ,q1 was 32 cr. so if we extrapolate it to q3 and q4 PAT can be 36 and 38 cr. so fy16 PAT may be @140cr and EPS will be 53-54 rs. range.
some assumption for thesis
- LAP growth and CP funding will help improve NIM
- 5-7 % qoq growth in loan assets
- no bad surprises on asset quality
- Bank rate cut will be mildly positive as borrowing from banks are declining.
havenāt got anything from NHB about risk weight on small housing loans yet, but whenever it will come (as NHB follows RBI with lag) it will be positive and may be big positive as canfin may not have to infuse additional capital till FY18 (figures crossed for this one)
disc: hold and biased
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Canfin I think is being re-rated again and is undergoing that re-rating. I had seen it trading at max 2.75-2.8 times FY15 BV. It has broken that upper band and has started trading at 3.45 times FY15 BV. How far will it be re-rated during this phase is yet to be seen.
Markets would keep rewarding this stock coz of its consistency, growth and prudent risk management.
This is one of those stocks where one shouldnāt try to second guess the target price, etc.,.even if stock price appreciates considerably. Should be forgotten once bought and should be held as long as underlying business does well.
After the stocks performance in last 2 years it isnāt easy to say whether it is under,over or fairly valued. But stocks with characteristics like this may undergo multiple reratings when there are other players in the industry who trade at significant or higher premiums.
Discl:Invested and views maybe biased.
Excellent results by Can Fin Homes with net profit up 90% in Q2FY16 with company getting benefits of operating leverage (other expenses up only 12%), and reduced interest expense (finance cost up 22%, compared to interest income up 33%). CanFin continues to be fastest growing HFC, with strategy of low cost expansion through satellite offices bearing great resultsā¦
The current book value is ~315 per share, and FY16 should be close to 350 - 360 per shareā¦so the stock is now trading at ~3x FY16ā¦FY16 EPS could be ~55-60, so now trading at ~18xFY16 PE multipleā¦
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