Can Fin Homes Hits 52-Week Low, Drops 19% in a Month

The company reached a new 52 week low of Rs 558.80 as it decreased about 8 percent on the BSE, which was trading at 74,686 for the mask during midday. In any case, there was significant trade volume on the floor, owing to a booming market. The investment for the housing finance firm is resting at the lowest price since April 2023. During this time, the BSE Sensex registered an increase of 0.31%, hitting 74,686 by 01:07 PM.

Having reported subdued performances for the December 2024 quarter, Can Fin Homes is down 19% from a month ago as the missing major disbursements and elevated provisions served as a shackle for them.

Disbursements in loans achieved in the third quarter of FY ‘25 was registered at Rs 1,789 crore, the same as the disbursements in Q3 of the previous fiscal year. As compared to the previous fiscal year, disbursements in the quarter under review demonstrated an year-on-year decrease of 21 percent due to problems related to registration in Karnataka arising after the new E-khata requirement was put in place. Due to this lower number of disbursements, the company has also suffered the asset under management (AUM) growth and this now stands at 9 percent for the year so far. The government of Telangana and Karnataka contributed 48 percent to the overall disbursements by the company. 

As noted in the opening statement, the management assesses the disbursement situation in Karnataka to be improving slowly due to the increase in issuance of e-khatas. This number is shrinking business expansion is subdued across many regions, which is evident in Can Fin Home’s muted gain after tax, which came in at Rs, 212 crore, showing a quarter on quarter performance of flat and year on year increase of just 6 percent. 

This is largely driven by geography focused challenges and a 61 percent qoq rise for the firm’s more generalized problems derived from a stricter regulatory environment. NII growth reported a net increase of just 1.5 percent QoQ/4.8 percent YoY, with the figures reflecting shit of Rs 344.7 crore. The gross NPA however remains unchanged at 0.92 percent.

The NPA has slightly increased but the value for SMA Stage 2 level remains the same. The company expects GNPA in Q4FY25 to improve to 0.8 percent with the expectation of stronger collections and the normalization of SMA 0 anomalies.

The combination of some external factors like regional stress in major areas such as delayed e-khaata registrations in Karnataka (27% of AUMs), changes in state policies in Telangana (19%) alongside internal factors like tech transformation with a change in business mix hampered business performance through 9MFY25.

Elara Capital’s analysts expect while margins and asset quality will probably receive some amount of stabilization, growth traction and operational revamp will try to override the outlook in the long run, according to a results update by Elara Capital analysts.The brokerage made minor adjustments on the company by lowering the expect targets for FY26E/27E by 6% and 10% respectively to reflect increased business strain as well as elevated costs due to the shift in the business model and systems. The firm indicated that these should be mitigated by the stable GNPA and target which has increased as well as steady NIMs resulting in approximately 2% RoA and 17% RoE in FY25E-27E.

According to PL Capital, demand recovery in the aforementioned states may be slow, but demand recovery is not the only difficult thing. Implementing the Loan Origination System and Loan Management System may also have negative consequences on credit growth previously set at 15% YoY for FY26E. 

At the same time, due to the renewal of the Credit Linked Subsidy Scheme (CLSS), loan growth for the company may see an optimistic change. New Asset Quality issues have persistently been on the rise since Q4FY24, as new issues along with the outdated pre RBI circular adding to the mess, the brokerage revealed in the company’s earnings report. 

Increase in SMA balances is presenting a problem of actively provisioning more than before. The company used to adjust the customer advances with EMI on monthly basis which is now forbidden after the revised circular from RBI.