Canfin homes ltd


(Susindar) #1043

This means Canfin should be valued down to 15PE and DHFL and indiabulls Housing valuations should increase by 50 to 100%. I always doubted PSUs and this is proving again. Hope PNB Housing doesn’t disappoint.


(ramanhp) #1044

http://www.bseindia.com/xml-data/corpfiling/AttachLive/e2da273a-5040-451a-8c66-567d04eaf4bd.pdf

Please check the YOY and QoQ increase the loan sanctions and disbursements. This is despite RERA and GST confusions. When you compare Canfin Homes with others that you have names, please keep in mind that Canfin Homes is almost pure housing finance company. The rest have a good composition on non-housing finance.
That said, HFC sector is heating up and CH is facing intense pressure. The past has been impressive. Will CF maintain a leadership? Time will tell. As per commentary, the sector is in a sweet spot. RERA benefits have started to show up and supply in affordable housing is improving.

I believe, one need watch next few quarters to see if CH can walk the talk.

Disc: Core Portfolio Holding


(newone) #1045

I don’t know much about DHFL. But doesn’t IBHFL do LAP, Builder loans etc on a bigger scale? They have a real estate group company to which and its customers as well, they can lend. But Canfin is very clear that those are not their target business and they have stuck to it. Perhaps Gruh is a better (but not ideal) comparison. Lot of common items between them except for one major factor where Gruh lends to non salaried class more as that is their target business (to which its parent HDFC doesn’t lend to and hence probably created GRUH). The segment to which canfin and gruh lend to had been struggling since one year due to demonetization and RERA. If you look at the monthly disbursement figures from their investor presentation, the trend is upwards.


(prash.peru) #1046

Thanks for your reply. The file you shared shows just the QoQ, not YoY, sanctions and disbursements figures. Page 6 here has the YoY disbursement and sanctions figures (if you look at the last 3 investor presentations, you see the same no to low growth trend): http://www.bseindia.com/xml-data/corpfiling/AttachLive/50a49037-1f21-4b01-b3aa-fb3c07994f12.pdf


(prash.peru) #1047

Hey, know very little about GRUH, but page 18 here has figures on the company’s loan disbursements (30% YoY on home loans, and 27% YoY across all loans): http://www.bseindia.com/xml-data/corpfiling/AttachHis/7c9e7df0-58bf-4a16-8239-de699f9d768a.pdf


(Susindar) #1048

Bottom line is whether you are able to grow profits and whether the books are healthy. If Canfin needs to grow further, then down the line they may need to increase their product offering to LAP and construction loans. In this aspect DHFL and Indiabulls are ahead of the curve. As long as they are able to maintain their asset quality (which they are) and grow at the same time, I do not find anything wrong in LAP and construction loans. Add to that Canfin is struggling to grow a relatively low loan book. I am not saying Canfin is bad as it still grew NP by 35% but at its current valuation the performance is not justified and there are better stocks.


(newone) #1049

Yes and Canfin has just 6% or so as LAP. Primarily pure home loans


(newone) #1050

Valuation depends on lot of factors. Look at P/B of Gruh…it is mind boggling but then it has management and parentage credibility. In the past, I have heard about management credibility issues about DHFL and thats what I was told as the major reason for its low valuations.


(Susindar) #1051

I am not comparing Gruh with these other stocks as I do not understand certain phenomena (Gruh, Dmart, Bajaj Finance, Dish TV, Jubilant foodworks) and just tend to stay away from these stocks.

But surely, Canfin is in the same league or a league below DHFL and Indiabulls Housing Finance! My personal belief is Canfin had no reason to elevate them to Gruh level. Therefore, from a valuation perspective I find more comfort in DHFL and Indiabulls (even after factoring in the almost decade old related parties issue in DHFL)


(newone) #1052

Canfin is comparable to Gruh on the business segment wise and not on valuation. Never can compare with HDFC group premium. But both target affordable housing as a main target but different income groups.


(Susindar) #1053

Both Dewan and IBHFL are targeting affordable housing segment too.


(newone) #1054

Yes, in fact every financial institution wants to target affordable housing segment. But not all HFCs are pure home loan finance companies. For eg., If you see the product mix of DHFL, homes loans are only 63%. The rest are SME loans, project financing & LAP. SME loans have plant & machinery loans, medical equipment loans etc and also there are lease rental discounting options as well. I guess NHB allows non home loans to be provided by HFCs but I guess there are some limits. Canfin has 90% of the portfolio as home loans only and this number varies for different HFCs. And IBULLS has corporate mortgage lending, which the likes of canfin / gruh does not. Even PNB Housing has pure home loans at 67%. Loans like construction finance, LAP, lease rental discounting, project finance provide for higher loan book growth but also equally carries lot of risks.


(prash.peru) #1055

Thanks for the explanation. But consider this: GRUH’s overall loan disbursals have grown at 27.67%, 27.66%, 6.97%, 3.47% (29.48%, 38.64%, 30.77% and 21.87% for home loan disbursements alone) YoY over the last four quarters, while the overall disbursal growth figures for Canfin are 3.6%, 10%, 2.9%, and 25% (source: company investor presentations). Considering GRUH and Canfin’s similar loan book size and character, why hasn’t Canfin recovered as well as GRUH?


(newone) #1056

@prash.peru, can you share the source from where you got those details? The disbursement figures of canfin were never in single digit for a YoY comparison. And my points about all these companies were about their business only. If you are referring to stock price changes, that is a different ball game. GRUH will always demand a premium compared to others. It is mainly due to its parentage - HDFC


(prash.peru) #1057

Hi, they’re all from the investor presentations of the past four quarters (make sure you compare quarterly figures YoY and calculate the percentages; the management sugarcoats facts in one of these presentations by providing percentage change figures for annual sums, which is BS)

Q2 2018 (page 6): http://www.bseindia.com/xml-data/corpfiling/AttachLive/50a49037-1f21-4b01-b3aa-fb3c07994f12.pdf
Q1 2018: (page 6): http://www.bseindia.com/xml-data/corpfiling/AttachHis/b17abc71-69c6-46ec-b4fd-ee6904a85a3f.pdf
Q4 2017 (page 6): http://www.bseindia.com/xml-data/corpfiling/AttachHis/34a88374-69c7-4da9-b2a7-00a7df72bfe2.pdf
Q3 2017 (page 4): http://www.bseindia.com/xml-data/corpfiling/AttachHis/0C4F82B0_1D64_4F8C_B9FD_7CCE793DD564_153354.pdf

For GRUH, you can find the figures in the presentations listed here: https://www.gruh.com/investor-presentation/

Do let me know what you think looking at the numbers.


(newone) #1058

Thanks, will go through them. Hope you have also considered the base effect for GRUH (as they have been growing slower in the previous years) and the demonetization impact in Q3 & Q4 for canfin & gruh in the last year.


(newone) #1059

The NPA levels have changed from 0.38 to 0.40% QoQ (increase of around 6 crores). Does anyone know about the recovery made in Q2 along with the details of new slippages?


(Amit Sethia) #1060

Based on the trend of Gruh and Canfin, Q1 and Q2 NPA increase and Q3 and Q4 it comes down. Just that this year it may not come down to 0% but is not alarming yet. On CANFIN website almost I see lot of notices of auctions since June 2017, work is happening to deal with it.

Discl : Invested


(newone) #1061

Agree. It would be good if management can share details of fresh slippages and recovery as well


(prash.peru) #1063

Has anyone managed to get their hands on the conference call transcript?