Shares of Can Fin Homes surged 9 per cent to Rs 589.70 on the BSE in Friday’s intra-day trade after the company reported a healthy set of earnings in June quarter, with profit after tax (PAT) jumping 49 per cent year-on-year (YoY) at Rs 162 crore driven by provision write-backs. Pre-provision operating profit (PPOP) was up 10 per cent quarter-on-quarter (QoQ) and 40 per cent YoY to Rs 215 crore.
At 9:40 AM, the stock was trading 7 per cent higher at Rs 578, as compared to 0.41 per cent gain in the S&P BSE Sensex. It had hit a 52-week high of Rs 721.25 in October 2021.
Asset quality of the housing finance company (HFC) was stable sequentially, with gross non-performing assets (GNPA) and net NPA ratio at 0.65 per cent and 0.3 per cent, respectively. On YoY basis, GNPA and NNPA improved 25 bps and 27 bps, respectively. Net interest income (NII) grew 38 per cent YoY and 5.5 per cent QoQ at Rs 250 crore.
Moreover, disbursements during the quarter increased by 92.68 per cent YoY, while loan book reached Rs 27,538 crore (up 24 per cent) with a clientele base of 2.15 lakh, Can Fin Homes said.
“Bank borrowings increased to 54 per cent from 47 per cent a year ago while the share of commercial papers (CPs) was stable sequentially at 11 per cent. Asset quality has navigated the pandemic stress with great resilience. We expect the healthy trajectory on loan growth and asset quality to sustain while margins are a key monitorable,” Motilal Oswal Financial Services said in a result update.
Until a few quarters back, loan growth for Can Fin Homes had turned muted due to higher aggression from banks and large HFCs. It navigated that period by compromising on spreads/margin to protect its customers from being poached by the competition. That strategy reaped dividends, with can Fin Homes having again embarked on a strong loan growth trajectory with the ability to maintain its spreads/margins. What the sustainable levels of margins will be are important to understand from an investor perspective. Its asset quality is highly pristine and credit costs should remain benign, the brokerage firm added.