If they are the only bidder, can they negotiate a lower offer (than what they had offered in their bid)? I am a bit surprised that HDFC hasn’t submitted a bid as the CMP is lower than what it was last time around. As mentioned in the report, Canara bank being a parent enables Canfin to raise money in market at relatively lower cost. I guess that would be the same if HDFC is the parent and hence this would make sense for them to buy as they are aggressively pushing affordable home loans themselves
I don’t think bid prices can be lowered now but I am too a bit surprised that HDFC did not bid.
Probably because they sold Gruh not long back in similar segment.
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Any update guys, what is happening on stake sale. Neither Canara or canfin has provided any news on this.
India Ratings Downgrades Can Fin Homes’ to ‘IND AA’; Outlook Stable
Interesting letter from CanFin on Non-acceptance of the rating assigned by India Ratings:
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He is not talking about Stake sale. Secondly, He is talking about forward looking outlook of rights issue by March 2020. Is stack sale scraped again?
I won’t be surprised if it’s scrapped as there was only 1 bidder
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How we can interpret the above news pls?
potential companies which would like stake in can fin homes do not want to buy at current valuation, not good news for can fin homes. this happened in 2018 also and the stock fell. no idea why nobody is interested in can fin homes.
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Good numbers.
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But that’s not true, is it?
IIRC, HDFC and Baring PE both submitted bids around 525-550 price range with Baring being higher and Canara Bank expecting control premium around 650.
This time around Baring PE submitted bid around 450 with 8% premium which also is deemed too low by Canara Bank. I think, Canara Bank management is looking at lifetime highs of 650 odd if they were ever to sell in the short term.
There was no official communication on the bid prices. All the price details were speculative, so we cannot base our judgement on the company based on such news.
On the Q3 results - they look very good. But is anyone concerned about the steady increase in the NPA levels over the past many quarters? GNPA is at 0.8% now from 0.25% odd levels couple of years ago. Although not at alarming levels, what worries me is the steady increase in bad loans.
Yes, there was no official communication but sources close to Canara Bank management only informed on the prices. So they can’t be closed speculative just because they are not official.
Next, as far as rising NPAs are concerned, they tackled it in last earnings concall. IIRC, SENP segment NPA is around 1.5% and Salaried is around 0.5%
The rate of NPA accretion has reduced though it has not come down. Maybe we need to consider this the new normal along with 600-700 cr net addition to loan book every quarter.
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I had heard in the last quarter results call that , in Dec quarter it will come down…they were confident it was seasonal, and will be better this quarter…
A bit of over promise, but I will give one more quarter.
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Q3 notes con-call/presentation/TV interviews:
Result details:
- Income 517 crs 16% up, PAT 97 crs 41% up
- Loan book 20171 crs 15% up
- Disbursements 1476 crs 12% up YoY, for 9 months 4% up
- NIM 3.42%, CAR 22.07%, C/I 15.55%
- ROA 1.98, ROE 19.74, D/E 8.68
- GNPA 0.80%, NNPA 0.59%
- Cost of borrowing 7.88, Avg yield 10.20
- Funding: NHB 15%, banks 57%, NCDs/CP 26%, deposit 2%
- Salaried 71% outstanding loans & fresh loans given and South india
- Home loans 90%, LAP 5%, Topup 4%, Plots 1% & others 1%
- Clients:155k, Average Ticket Size Profile: 0-10 Lacs 16%, 10-25 Lacs 54%, 25-50 Lacs 27% and > 50 Lacs 3%
- 160 branches & 21 affordable housing units, 14 satellite offices
Growth:
- Positive growth in disbursements after few quarters
- Demand is slowly coming back but stress continues in non affordable segment where CanFin has less presence
- Will grow better than market but will be cautious on asset quality - if we try to grow 30%, asset quality would suffer so comfortable with 20% growth
- Expecting 19-20% growth for next 4-5 quarters
- Not comfortable with significant part of segment left by other big HFCs
- Karnataka growth has come back, AP, Telangana, TN and North are growing
- Expansion will be in existing GEOs and may not add new states
- Will try to maintain NIM but will not increase from here
- Top 3 priorities: Growth, Asset quality, Profits
Loan book:
- No plans for buying loan book from others
- No plans for selling loan book for refinancing
- No plans to increase developer loans
- Planning to increase non housing/topup loans to be 10-11% over 3 years from 5% currently
- Repayment has increased due to 144 crs CLSS subsidy, some customers switch after few years to banks due to interest arbitrage. Likewise CanFin also gets loan transfers from other HFCs
- 75% loans for self construction, independent houses, compound etc. rest 25% for flats which are close to completion
NPAs:
- Lot efforts gone in collection and recoveries, expecting to reduce NPA in Q4
- SNEP NPAs are usually more than 2 times of salaried - SNEP segment will be maintained at 30% of the loan book
- Using declared income of customers not surrogate income to maintain asset quality
Funding:
- More funding from banks YoY, reduced market borrowings and will keep CP low
- Long term loans raised from banks are almost like AAA ratings, expecting ratings upgrade in future
- Positive ALM across all timelines
- 4k crs unavailed documented bank credit lines
- Capital raising will happen over 3-6 months to reduce D/E
Disclosure: Holding - Do not recommend buy or sell. Not an investment advisor and Investors are advised to do their own due diligence.
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