Can Fin Homes Upgraded to Buy with Rs 1075 Target Price: Prabhudas Lilladher

Can Fin Homes Sees Recovery in Disbursements and Improving Asset Quality

Prabhudas Lilladher's research report highlights a positive trend in Can Fin Homes' 4Q disbursements, driven by a recovery rate in Karnataka and Telangana. The company's loan book saw a 10.5% year-over-year (YoY) growth in Q4, with the research firm expecting a loan growth of 14% in FY27 and 13% in FY28E.

The National Interest Margin (NIM) is expected to trend in line with the company's guidance at 3.75% as the portfolio reprices. Can Fin Homes also has levers to manage an elevated Cost of Funds (CoF). Asset quality trends have been steadily improving, with credit cost guidance remaining benign at approximately 15 basis points (bps) in FY27.

The company's cost/income ratio is expected to be elevated at 18% over FY27-28E due to investments in business transformation and branch expansion. Despite this, the research firm expects a stable margin trajectory.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Estimate Revisions

Valuation and Recommendation

Based on the revised estimates, Prabhudas Lilladher values the stock at 1.8x March 28, 2028 Price-to-Asset-Based Value (P/ABV), resulting in a Target Price of Rs 1,075. The research firm reiterates a BUY recommendation for Can Fin Homes.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline