Research as on 19 May 2017

Business Model-

Can Fin Homes Ltd, set up under the sponsorship of Canara Bank, was incorporated in the year 1987. The Company is a housing finance and also deposit taking institution approved by National Housing Bank (NHB), the apex authority of housing in the country.  It is the first housing company to be promoted by a nationalized bank in India. The company, as on date, is having 124 branches and 46 satellite offices spread across various locations of the country. The company has strong domination in southern India as 75% of its business arrives from southern India and the remaining from Northern India. The company mainly focuses on providing housing loans to individuals. The loan book grew at 25% on YOY basis of which 88% of the loan books are housing loans whereas 12% are non-housing loans.

Company’s Financials – 

The company has given high performance in terms of revenue, net profit and loan books growth. In the last five years, revenues and net profits grew at 36% and 44% compounded annually whereas loan books grew at a CAGR of 32% in last 4 years. The company’s vision is to build loan books of Rs. 35000 Cr. till FY 20 which means expected growth of 43% compounded annually for the next three years.

3- Years Returns of Sensex V/S Can Fin Homes –

In last 3 years (dated till May 19, 2017), the Sensex has given returns of 24.76% while Can Fin Homes has outperformed the Sensex returns to 984.59%.

 

 

 

Key Ratios and Valuation-

Housing Finance Industry-

In the last 5 years, the housing finance industry (including bank’s share and housing finance company’s share) has grown at 19% compounded annually, but if we exclude the bank’s share and consider only housing finance company’s share in home loans market it has outperformed by giving a growth rate of 22% compounded annually and it would continue to outperform the bank’s share in home loans market.

Conclusion-

The macro-economic factors are favoring the entire Housing Finance Industry and will continue longer, considering the company’s strong management and future prospect, we recommend investors to make investments for long term.

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