May be the expenses incurred in Q 2 wud hv been accounted for in Q3.
Hi Vinay,
Found Following two announcements on Canfin Website.
********************************************************************************************************
We proudly announce the opening of our new branches as follows:
|
Sl.NO |
Place |
State |
Proposed date of opening |
|
1 |
L.B.Nagar - Hyderabad |
Andhra Pradesh |
01/11/12 |
|
2 |
Dharuhera |
Haryana |
07/11/12 |
|
3 |
Greater Noida |
Uttar Pradesh |
08/11/12 |
|
4 |
Sriperumbudur |
Tamil Nadu |
19/11/12 |
With the above, the total number of new branches opened during the financial year 2012-13 will be 14 and Sriperumbadur will be the 66th branch of our Company.
Date: 06/11/12 Chief Manager
Planning & Development Dept.
Place: Bangalore Registered office
**********************************************************
We proudly announce the opening of new branch as follows:
|
Sl.NO |
Place |
State |
Proposed date of opening |
|
1 |
Udupi |
Karnataka |
30/11/12 |
With the above, the total number of new branches opened during the financial year 2012-13 will be 15 and Udupi will be the 67th branch of our Company.
Date: 28/11/12 Chief Manager
Planning & Development Dept.
Place: Bangalore Registered office
**********************************************************
If we believe these announcements, it shows that out of the 67 at present, they have opened at least 5 branches in Q3. I could not find the data for the period 1.10.12 to 31.10.12 on their website.
P.S.: The announcments are attached for ready reference.
Hi,
I am not worried about operating exp goingup in a quarter as that is expected. Overall for 9 months the operating exp has gone up by only 8%. Their way of accounting operating exp each quarter is odd! You have a 50% drop in Q-2 and then a 83% jump in Q-3. And just see their Q-4 FY 12 op exp…its negative!!!
So if the same erratic way continues Q-4 op exp might be very low.
My big worry is about NIM contraction. Net Interest Income has grown only by 15% in FY13, though Interest income grew by 33%. I think contribution from NHB has decresed with huge disbursement growth. And canfin may be lending at lower rates now to beat the competition and grow disbursement.
Loan book growth is very impressive…at 3592 in 9 months the loan book growth will be 45% for FY13! With a NIM of 3.0 they will achieve Fy13 BV of 185-190. EPS should be atleast 23 for the year.
Similarly FY14 BV and EPS will be around 215 and 29 with a NIM of 2.9 and loan book growth of 40%.
The key question is will market give 1.25 to 1.5 P/B for canfin. That could depend on the current management intent to grow the com being sustained and NIM not contracting much. The latter could be helped by RBI cutting rates.
Cheers
Vinod
1 Like
All the three reputed brokerage houses recommending Canfin Homes Hdfc Sec,Motilal Oswal n Sharekhan continue to like the stock.
There will be a fillip to NII as NHB has reduced rate by 0.25% recently. Any intt rate cut by RBI will be icing on cake as the rate reduction to existing borrowers will not be full n will be with a lag.
They all are very positive on it ie the research houses. The performance has been well above their expectations. After this one time expenditure on setting up of offices n manpower is finished over next few qtrs improved top line growth thru new offices will add directly to bottom line.
another report from Centrum
http://indiaer.blogspot.in/2013/01/canfin-homes-initiating-coverage-centrum.html
another report from Centrum
http://indiaer.blogspot.in/2013/01/canfin-homes-initiating-coverage-centrum.html
Does anyone have the full report? Would be interesting to get their analysis of Q3 results. HDFC sec usually posts results analysis too.But it is generally with a lag, presumably to do more due diligence. waiting for that. Even otherwise, PAT growth of 18-20% and book value around 185, 38% growth in outstanding loans (whihc will contribute to interest income in future) are positives, eventhough optically they have not maintained their profit growth of last 2-3 Qs. And most important is the opportunity size. “Experts” on money control (SP Tulsian, Ambarish Baliga) and some property discussion on NDTV were more positive on Bangalore and surrounding regions than say Mumbai or NCR. This is where CanFin is present. It all boils down to the current management remaining focussed and committed to growth and not fall prey to the laidback and easy-go attitude that usually characterises PSUs. Also, they should stick to low value sub-10 lakh loans and rural/semiurban areas (HDFC sec report had indicated that they are mainly into that, though some management note had stated that their average is 15 lakhs) and not increase the loan size to say 25 lakhs where there is more competition from banks. There would be a tendency to do that since Return on Time Invested (ROTI) is higher in higher value loans (more interest, more fees for same level of credit analysis or less). It has run-up from sub-150 levels to 180 in anticipation of growth, and it would now wait for growth to be delivered.
Link: http://indiaer.blogspot.in/2013/01/canfin-homes-initiating-coverage-centrum.html
1 Like
Can fin in Sharekhan top 11 picks-
hi - the stock is in T to T segment. is this negative? have tried searching far back, but have not got any information on the reason why this is in T2T. have seen stocks being moved from normal trading to T2T category mainly due to adverse circumstances like high volatility, not meeting listing norms etc. would appreciate views from seniors.
With all these brokerage analysts gung-ho on Can fin, looks like the famed herd mentality in play.
in return the stock has decided to play it differently,
Hi,
Have this analysis to share with regards to Canfin. I am primarily trying to understand the lag effect of new loan disbursements on loan book and then on interest income.
| 2011 | 2012 | 2013 | 2014 | |
| Disbursement (Cr) | 472 | 859 | 1670 | 2505 |
| Disb Growth | 82% | 94% | 50% | |
| Loan Book (Cr) | 2207 | 2674 | 3898 | 5857 |
| Loan Bk Growth | 21% | 46% | 50% | |
| Net Int Inc | 72 | 84 | 99 | 141 |
| NII Growth | 17% | 17% | 43% | |
| Repayment | 392 | 446 | 546 | |
| Repayment% | 16% | 14% | 11% | |
| NIM | 3.34% | 3.44% | 3.00% | 2.90% |
Here we see that inspite of a 82% growth in loan disbursements in 2012 the loan book grew only by 21% and Net Interest Income grew only by 17%. Apart from loan book base two things are at play here. Canfin had a old mature loan book with hardly any disbursement growth before 2012. Hence the repayment rate was high (Home loans though are given for a 20 year period tend to be paid off within 8-10 years on an average and principal payment for picks-up as the years go by due to progressively lower interest component and clients having higher savings which they use to prepay the loan faster than initially approved tenure).
Secondly most of the 2012 disbursements would have happened in the second half of the FY leading to lower interest collection during the FY.
Now if we see what could happen in 2013-14 - the loan book consist of relatively new loans and hence repayment rate will be much slower. Canfin has managed astounding disbursements growth of 82% in 2012 and is on track for 94% growth on top of that in 2013! The loan book growth should be atleast 50% in 2014 even if we assume the loan disbursement growth will be only 50% in 2014 (conservative considering the com is continuing branch expansions and has shown great growth in the FY12 and 13).
Even if the NIM contracts from 3.4% in 2012 to 2.9% in 2014 we still have a net interest income growth of 43%. This should lead to BV of Rs 225 per share if we consider a 33% growth in operating expenses (again this is conservative because we saw only a 8% growth in operating expenses for the 9 month period this year inspite of all the branch expansions).
Do let me know your thoughts on this analysis.
Cheers
Vinod
1 Like
To add further to the above analysis. Have a look at the table below which has the 2012 fgs.
The disb/loan book ratio of Canfin will increase from 21% in 2011 to 42% in 2013. Hence most of the disbursement growth will directly add to loan book growth. A younger loan book will have slower repayments.
| CFHL | LICHF | DHFL | GIC | GRUH | |
| Loan Book (Cr) | 2674 | 63080 | 19355 | 3872 | 4077 |
| Disbursements (Cr) | 859 | 20026 | 9065 | 992 | 1487 |
| Disb/Loan Book | 32% | 32% | 47% | 26% | 36% |
I have revised my earlier estimate for 2014 BV based on this analysis. I think Canfin is nicely poised to give great results going forward. NIM holding at 2.9% or more and operating expense growing less than 33% for FY14 are the biggest assumptions here. I do not think there will be any issues with NPAs.
Cheers
Vinod
Dicl: Invested and is one of the top 3 allocations
1 Like
hi vinod ms,
Nice to see some perspective from someone who has had hands on experience working in the industry.
I agree with most of the analysis posted by you and that also tends to concur with two recent research reports by sharekhan and centrum.
Even if there is slow growth for canfin, the downside seems limited from current prices.
I think there is a very good risk reward in canfin.
regards
hietsh.
the budget has proposal to offer additional tax deduction of Rs 1 lac over and above the 1.5 lacs prevalent earlier. This is to new home loan availers only and doesnt extend to the pre existing home loan customers.
This should provide additional motivated customers who are willing to avail tax benefits additionally.
Looks like a plus for all housing finance companies.
Hi Hitesh Bhai,
Yes, the gov is trying to push for more construction activity which help many help many related industries too.
I think the new tax exemption is for loans below 25 lacs. Mostly companies which give loan in the 15-30 lac category will benefit more. This will encourage the affordable housing segment more and naturally players operating in the Tier-2 and 3 cities. DHFL, Gruh, Canfin will benefit more than HDFC and banks.
Infact many affluent segment clients might actually try to reduce their loan to 25 lacs to avail this tax benefit and that way this could have some negative impact on loan book for players operating in cities who would normally have more number of loans in the above 25 lac category. But that would be a small negative impact since there are low-cost-housing projects in cities too. Puravankara is an example of metro based affordable housing in the range of 20-40 lacs.
I think real estate cos like Ashiana will also do well with this tax exemption. In fact I am bullish on Canfin, DHFL, Ashiana and Puravankara at current valuations.
More rate cuts will add momentum…
Cheers
Vinod
**This could do well for NBFCs (and to some extent banks) which provide low ticket loans especially in rural areas.
**
On a side note, the fine print being “value of the property purchased should not exceed Rs 40 lakh.”
1 Like
[quote="Vedant, post:77, topic:461716698"]
> Hi,
>
> Have this analysis to share with regards to Canfin. I am primarily trying to understand the lag effect of new loan disbursements on loan book and then on interest income.
>
> 2505
> Disb Growth | 50%
> Loan Book (Cr) | 5857
> Loan Bk Growth | 50%
> Net Int Inc | 141
> NII Growth | 2.90%
>
> Here we see that inspite of a 82% growth in loan disbursements in 2012 the loan book grew only by 21% and Net Interest Income grew only by 17%. Apart from loan book base two things are at play here. Canfin had a old mature loan book with hardly any disbursement growth before 2012. Hence the repayment rate was high (Home loans though are given for a 20 year period tend to be paid off within 8-10 years on an average and principal payment for picks-up as the years go by due to progressively lower interest component and clients having higher savings which they use to prepay the loan faster than initially approved tenure).
>
> Secondly most of the 2012 disbursements would have happened in the second half of the FY leading to lower interest collection during the FY.
>
> Now if we see what could happen in 2013-14 - the loan book consist of relatively new loans and hence repayment rate will be much slower. Canfin has managed astounding disbursements growth of 82% in 2012 and is on track for 94% growth on top of that in 2013! The loan book growth should be atleast 50% in 2014 even if we assume the loan disbursement growth will be only 50% in 2014 (conservative considering the com is continuing branch expansions and has shown great growth in the FY12 and 13).
>
> Even if the NIM contracts from 3.4% in 2012 to 2.9% in 2014 we still have a net interest income growth of 43%. This should lead to BV of Rs 225 per share if we consider a 33% growth in operating expenses (again this is conservative because we saw only a 8% growth in operating expenses for the 9 month period this year inspite of all the branch expansions).
>
> Do let me know your thoughts on this analysis.
>
> Cheers
>
> Vinod
[/quote]
Nice analysis Vinod.
But what made you project disbursement growth of 94% in 2013? Do we have any data available for 9 months of2013? If yes, please share.
Also you are projecting a 50% growth in 2014 disbursements. What is the reason for such bullishness?
I agree downside is limited with P/BV <1 butso is upside withoutloan bookgrowth.
Also dividend isn't great & hasn't increased since ages (last year0.5 was extradue to silver jubilee year).Any views on that.
| 2011 | 2012 | 2013 | 2014 | Disbursement (Cr) | 472 | 859 | 1670 | 82% | 94% | 2207 | 2674 | 3898 | 21% | 46% | 72 | 84 | 99 |
| 17% | 17% | 43% | ||
| Repayment | 392 | 446 | 546 | |
| Repayment% | 16% | 14% | 11% | NIM | 3.34% | 3.44% | 3.00% |
Hi Jatin,
Disbursement growth for 9 months is available in the website itself - 1253 Cr. The management had guided for 100% growth in sanctions from 1000 Cr to 2000 cr this year and are on track for the same.
If you look at the disbursement growth achieved in 2012 (82%) and what is possible in 2013 (94%) I think it is a fair assumption to give a 50% growth in 2013-14 on the back of new branches, more DSAs and the management push continuing. Canfin was just not using its potential so far and you can expect high growth to continue for some more years before the stable growth rate of 20-30% in disbursement.
Let me know if you think otherwise.
Dividend should also increase when the Income increases. If you see the projection, NII is also expected to increase from 2014 only with good loan book growth and more stable NIM at 2.8-3.2 range henceforth.
Cheers
Vinod
Hi Vinod,
Kindly share the link of 1253 crs- 9 m disbursements & mgt guidance of 100% growth. Coudn’t find it on the website.
Regards
Jatin
Found the link.
Have to agree that things look good. This new loan book is yet to appear in Revenue & PAT, so thingslook promising.
Plus growth in branches & new hirings is there. & Budgethascome outwith another positive.