Canfin homes ltd

(srikanthg) #1466

Updaed result reported.

In furtherance to our letter, we have attached the revised results. The corrections made relate to ; `Revenue from Operations’’ may please be read as Rs.39943.86 lakh’’; Paid up equity share capital of Rs.2663.31 lakh includes Rs.0.23 lakh forfeited shares; EPS for 3 months ended 31/03/18 is Rs.5.67; EPS for preceding 3 months ended 31/12/17 is Rs.6.02 and EPS for the corresponding 3 months ended 31/03/17 is Rs.5.32.

(Multiplier777) #1467

PAT is up 28% YoY, Price/book at reasonable 4.4x and RoE at 28%. I think they are a great set of numbers from a company from whom most had lost hopes.

Yes, growth has not picked up in the last few quarters but let us not live life QSQT ‘quarter se quarter tuk’. Probably need to take a much longer view and ask the question whether these are temporary headwinds or all is over for Canfin while the whole sector continues to do well.

It would be interesting to know the NPA direction also which hopefully should not surprise on the negative side.

Happy to be corrected on above.

(Multiplier777) #1468

Just picked this up from ‘Hitesh Porfolio’ thread where he was referring to when to buy steady compounding companies

‘Trick is to harness the courage to buy some of these when they do report poor quarterly numbers in succession. Because thats exactly when the street is maximally bearish and stock price is punished beyond reality and becomes really attractive.’

Does Canfin fit the above profile and is an attractive buy?


They seem to have made very less provisions in this quarter. So hopefully the NPAs have come down. Also need to see if there was good amount of distraction in the quarter due to stake sale activities. Due diligence discussions, visits by various bidders meeting with operations team of Canfin to understand business etc.

(Sethuraman) #1470

Thanks for clarification related to EPS. Tracking the Earnings growth over past 3 years:
2016 Vs 2015 - 42.39%
2017 Vs 2016 - 49.73%
2018 Vs 2017 - 28.23%

Valuation wise,
P/E ~ 19.6
P/B ~ 4.7

Will await the AR/final presentation to see other metrics…



A few months back, while answering a fellow boarder I wrote that the loan book growth of CanFin may slow down to less than 15% sometime during FY19 and and profit growth may be hard to come by. Rather than digging into the details, people shouted “blasphemy”. An increase in interest rates has preponed the decline in qoq profits to Q4 of FY18 itself. Soon, it will become clear whether it is the story of a quarter or if we will see a slow growth in assets and stagnating profits during FY19. Forget about the decline in profits in this quarter (pauwa), even if one looks at the increase in profits of previous two quarters (addha) or four quarters (khamba), nasha utar jayega :smile:


Canara bank should have sold their stake to HDFC or Baring. Guess they missed a good opportunity. On the other hand, canara bank can send some off their loan book towards canfin to boost growth.

(Furkan Alam) #1473

28% rise in profits YOY is a pretty decent number… I remember management had cited FY19 and FY20 should be best periods for the housing finance companies. So i expect better growth going forward.

It surely has tested the patience but still confident on the sector …

Disc :- Invested and views may be biased…

(Sarabjeet Singh) #1474

Canfin’s Investor PPT

(Jiitt007) #1475

what could be the impact of below snippet! A big jump in NPA


Company expected to announce 1000 crores rights issue shortly. Not sure how short they mean as it’s almost one year since they first announced it. Guess they are trying to keep stock price up. Also vision is updated with 40000 crores by 2022 as against 35000 by 2020. And loan book target of 19500 crores for next year. But they couldn’t maintain 16000 crores target by Mar 2018 which was set only 2 months ago. So not sure how realistic Mr. Hota is…


Will he be the next M.D. of Canfin, as Mr. Hota’s term comes to an end next year? This person is coming in as Deputy M.D. to strengthen management.

“Shri Shreekant NI Bhandiwad, Dy General Manager, Canara Bank has been inducted to the
Board as Deputy Managing Director (Additional Whole-Time Director) to strengthen the
management and give a thrust to operations during the years ahead”


Sorry, but it seems a bit late to me that the ‘big jump’ in the NPA is being spotted just now, at the end of the year, rather than during the previous quarters when it was actually revealed and well discussed by the knowledgeable investors on this forum and elsewhere. As for the current quarter is concerned, both the NPA and GNPA is showing a downtrend from the previous quarter from 0.25 to 0.20 and 0.46 to 0.43 respectively. Not sure which trend will extrapolate into the future - the dismal annual trend or the encouraging quarterly trend.

Regardless of the trend, the absolute percentages are one of the best in the industry although relatively higher by Can Fin standards. The management had commented earlier that it was usual for the provisioning to be strict at the beginning and the numbers to taper down to the usual standards as the year ends. But this is Q4 and the numbers have not gone down to the usual standards and that’s something to be concerned about.

But IMHO, this will be overlooked by the market if Can Fin strongly addresses the bigger concern before it - declining growth and revenue.

(Venkatesh) #1480

the company added only 3 new branches in FY18. It increased from 170 to 173. I wonder what happened. in the aftermath of GST and demon looks like the company has forgotten to do the basics. They have a target of adding 20 branches in FY19.

Lending rate, their borrowing rate, NIM are market determined. What is under your control is you increase distribution and have proper risk control to keep NPAs down. I hope the FY18 non expansion is a one off. If not the story is in doldrums. Management focus on the basics is paramount. If someone attends concall they should quiz management on this parameter.

(Yogesh Sane) #1481

Company is guiding for a loan book of 19,000 Cr for FY 19 and 40,000 for FY22. For FY 19, it translates to a growth of 3257 Cr of additions to existing loan book and a growth of 28% thereafter for 3 years. In comparison, addition to loan book has stagnated at around 2,475 Cr for last 3 years and growth has steadily dropped from 41% in FY15 to 18% in FY18. Chart below shows what company has achieved and what it is projecting.

Source: Company Presentation and author’s calculations.

Part of the loans disbursed make up for rundown in loan book due to loans that matured or prepaid. for FY 18, 5,207 Cr loans were disbursed and this resulted in a net addition of 2430 Cr to loan book. We can safely assume that about 5,207 - 2430 = 2,777 Cr loans ran down. This is approximately equal to loan book as of FY12. Essentially, FY 12 loan book ran down in approximately 6 years. Assuming a run down period of 7 years for future calculations, we can estimate how many loans will have to be disbursed to reach that magic figure of 40,000 by FY 22. Table below has the math.

Source: Company Presentation and author’s calculations.
Note,Disbursal for FY 19 is calculated based on rundown period of 7 years while for FY 18 this is 6 years.

Based on the table above, company will have to triple its disbursements in 4 years. In order to achieve that, it will have to at least double number of offices even if you assume each office will disburse approximately 40 Cr worth of loans from current level of 30 cr/yr. Office productivity has stagnated over last 4 years.
Overall, disbursal target looks like a tall order.

Source: Company Presentation and author’s calculations.

I hope company has enough plans in place to achieve these ambitious targets. I think these targets are little stretched. Over last few years, loan book grew rapidly because rundowns were limited. Going ahead, this will prove to be a challenge.

Disc: No position, interested.

PNB Housing Fin - Fast Growing HFC
(Ketan) #1482

Few observations :
First is Canfin’s loan book is predominantly housing loans (90% at present) and generally home loans are of higher tenures- 15 to 20 years. Though there will be regular pre-payments, your assumption/working on 8 years loan run-down seems aggressive. What would be the change if you take 10 year loan maturity?
Secondly, average business per branch is mentioned as Rs.109 Crs. on pg.35 of latest investor presentation.
Finally, we have to also see if the Company has enough funds to execute these plans, I think rights issue would have to be called for sooner than later.
Idea is to find out if Mgmt is conservative of aggressive in giving these new targets.
Disc: No positions, but interested.


Details of upcoming rights issue of 1000 crores to be announced shortly…


Congratulations! Finally, someone decided to dig in to the details.

One unsolicited advise. The run-offs comprise both amortization and prepayment of loans. Amortization is slow during the initial years, while prepayments are very high. You may want to divide the annual run-off by the previous year or the average loan book for the current year. You are doing it approximately by projecting a 7 year amortization of the prior year loan book. Here, the assumption is that the previous year book runs off by ~14% during the the current year. The actual rate is higher, at ~22% of the previous year book for FY18. This rate has been increasing sharply since FY15, when it was ~16.5%.

As a result of the higher that projected runoffs in your model, CanFin would need even higher disbursements to reach the targeted AUMs. For example, during FY19, ~7000 crs of disbursements would be required and not ~5500 crs. And so on for the subsequent years…

Guys! Don’t get surprised if this comes as a sobering thought.


Pranav, what if Canara bank lends support by moving some of its home / personal loan enquiries towards Canfin homes? Infact, canara bank is more motivated to grow Canfin for future sale at higher valuations.


My estimate for FY19 disbursements is slightly lesser at 6600 crores. The pre/repayment has steadied in the past couple of quarters due to interest rates changes not happening as much as it did early 2017. For Q4, it has slowed a little to 700 crores from 720 crores in Q3. Fair to assume that it will remain there as we don’t see interest rates going down in the near future. Also, the loan book target for fy19 is 19500 crores, which is an increase of approximately 3750 crores. So, to achieve 19500 crores book in fy19, the total disbursements have to be (700*4=2800) + 3750 = 6550 crores, which comes to monthly disbursement of around 550 crores, which is not very difficult, especially if Canara banks gives a lending hand. But 2022 target of 40,000 crores looks quite unrealistic.