Canfin homes ltd


(Vijay D'Souza) #1128

Usually, these are the works of PR agencies. Theses PR agencies arrange for these TV interviews, newspaper articles and so on… Nowadays, almost everything that appears in Print and TV is PR activity and channels as well as newspapers charge them for these activities.

Sometimes, TV channels may approach the companies if they have a theme based program. For example, a theme on “Realty Trends and its Future in India”… here they may approach the companies for advertisements, and in lieu of that they may arrange for a small interview of the key person in the company to appear on this show.


(newone) #1129

Which type of companies would be interested in buying the stake in case Canara bank wishes to sell the entire 30% stake?
Can it be…

  1. Banks - Kotak / RBL types ( I guess these two don’t already have a big home loan book, need to double check once) - Ruling out Kotak as they already have a 30000 crore home loan / LAP book

  2. Other HFC - HDFC / LIC Housing (Canfin plays to the market segment that is kind of in between where HDFC & GRUH operates - extreme ends)

  3. Other NBFC - Any NBFC aspiring to get into affordable housing segment and / or that which doesn’t already have a HFC licence

  4. FIs like GIC Singapore


(newone) #1130

While going through Canara bank’s Q2 investor presentation, noticed this slide. Can anyone let me know what does "Housing loan (indirect)"mean?


(prash.peru) #1131

Just wondering if the correction in the stock’s price since its June-top was largely about the rights issue than anything else (approval for rights issue was given in June). The stock is now showing signs of life at a price level that’s around 30 times post-dilution earnings, which I believe was the stock’s PE until the rights issue approval was announced (so maybe it was just a slow grinding adjustment to reflect the upcoming dilution). If so, the stock should stabilize at its current level without any further fall until and after the rights issue. Let’s see if my theory holds true.


(newone) #1132

If Canara bank sells its entire stake (to a non psu bank), then if Canfin wants to raise capital, I don’t think it would be via rights issue. Would be QIP or some.


(prash.peru) #1133

I don’t get your point. Isn’t the rights issue already approved, except for the date (which is yet to be announced)?


(newone) #1134

Canara bank management has approved rights issue. But if they sell their entire stake, new promoter comes in. It is upto them to decide how to raise funds. Generally, PSU banks take the rights issue route, so if the new promoter (assuming canara bank sells off completely) will most likely not go with the rights issue option.


(ramanhp) #1135

https://www.edelweiss.in/research/can-fin-homes-ltd--low-risk-highgrowth-play-on-generic-opportunity-6fa890.pdf


(newone) #1136

@ramanhp, thanks for sharing this. It is a very detailed document which gives quite some information. I do have one question in one of the metrics mentioned by the edelweiss research team. Is it something we can check with them?
Please see below pic. The last but one row (Basic number of shares (cr.) has increased from 13.3 to 14.2 in current fiscal. The current equity base post split is 13.3 crore shares. But how did they come up with a new number of 14.2 crores for FY18?

image


(newone) #1137

And Edelweiss is one of the final top 10 investment banker empanelled by Canara bank for the stake sale process…

http://www.canarabank.com/media/6206/empanelled-mbs-ibs.pdf


(newone) #1138

I see this statement in the report

“CFH is well capitalised with Total Capital Ratio of 18.79% against NHB requirement of 12%. Tier 1
Capital Ratio is 16.51% against regulatory requirement of 10%. We assume an equity capital raise on INR 400 cr in FY18E since an approval for INR 1000 cr (outer limit) has been taken”


(Rajarshi) #1139

https://www.edelweiss.in/research/stock-specific-reports-1/Can-Fin-Homes-Ltd---Low-risk-high-growth-play-on-generic-opportunity-6fa890


(newone) #1140

Canfin homes gets registered as corporate agent for insurance business… can anyone throw light on the size of such business practice?

http://www.bseindia.com/xml-data/corpfiling/AttachLive/f0f091bc-c219-4622-9d27-26ea468867a3.pdf


(Vijay Gawde) #1141

Being insurance agent is a complimentary to mortgage lending. they will be able to offer the insurance for the properties financed by them and earn some commission as well.


(Finrahul9) #1142

Well diversifying into insurance will not give them any special moat as insurance itself is a highly competitive industry. Yes but it’s a clear sign of slowing growth in the sector.


(Kumar Saurabh) #1143

It’s not about moat but using the same infra, employee and customer base to cross-sell which means revenue and margin improvement . Something like when Manapuram started using existing branches to diverrsify beyond gold. You rightly said, this highlights the mgmt acceptance of need to look for additional sources of growth due to slowing growth visible in numbers


(mp bajaj) #1144

Not can fin alone, even insurance agents will be trained to sell housing loans. Good for increasing the market size. One of the precondition for the Sector Leader of a bull market is no entry barrier. Many entrants in HF loan biz with many strategies to increase the market size. So it is good that Can fin is doing the reverse strategy. Slowing of growth is temporary due to demonetisation, RERA, inadequate supply side, GST difference in house under construction & ready-to-occupy house etc. Local problems of Tamil Nadu which is an important geography for HFCs.


(newone) #1145

They are not entering insurance industry as an insurance provider but rather acting as agents who will sell plans and get commision. I believe Gruh also sells insurance products on a smaller scale by acting just as agents


(Alok Bhola) #1146

(vipin111) #1147

I think the worst is already reflecting in HFC share prices.