Healthy execution sustains growth momentum…
About the stock: Can Fin Homes (CFHL) was promoted by Canara Bank in 1987, with ~30% stake as of Mar 2026. The HFC has a presence in 249 locations across 21 states and union territories (UTs).
Housing loans comprise ~83% of book; of which ~68% is to salaried customers
Average ticket size is ₹27 lakh for housing, ₹14 lakh for non-housing loans Q1FY27 performance: Can Fin Homes reported a healthy Q1FY27 performance, with disbursements at ₹2,609 crore (up ~29% YoY), resulting in loan book growth of ~11% YoY/ ~2% QoQ to ₹42,961 crore. Net interest income grew ~18% YoY (~1% QoQ) to ₹427 crore, while NIM improved 17 bps YoY but moderated 38 bps QoQ to 3.81%, reflecting the impact of interest rate transmission. PAT grew ~20% YoY (- 23% QoQ) to ₹268 crore, with sequential decline largely due to absence of one-off tax benefits recorded in Q4FY26. Asset quality remained healthy, with GNPA/NNPA improving to 0.87%/0.42%, reflecting stable collections and lower credit costs.
Investment Rationale:
Growth outlook supported by improving execution drivers: AUM growth improved to ~10.8% in Q1FY27 (vs 10.4% QoQ), due to elevated rundown led by higher principal amortisation following the shift to quarterly rate reset. The company continues to diversify its franchise through increasing traction across self-employed & non-housing segments, and expansion of tie-ups with housing projects. For FY27, management has maintained disbursement guidance at ~₹13,000 crore, implying a ~14% growth in AUM. The ongoing LOS/LMS rollout is expected to improve turnaround time, sales productivity and customer acquisition, supporting sustainable medium-term growth.
Stable margins and asset quality support earnings: With transition to quarterly reset being largely undertaken, Can Fin Homes reported 2.83% spread and 3.81% NIM in Q1FY27, ahead of its FY27 guidance of 2.75– 2.80% and ~3.75%, respectively. Liability profile remains favourable with a predominantly repo-linked borrowing mix, refinancing of high-cost borrowings and stable portfolio yields supporting margin resilience. Asset quality remained healthy with GNPA improving to 0.85% (vs 0.87% in FY26), lower delinquency formation and management reiterating ~10 bps credit cost guidance. Management aims to maintain RoA above 2.4% and RoE above 18%, supported by resilient margins, prudent underwriting and productivity gains from ongoing tech transformation.
Rating and Target Price
Continued focus on expanding distribution channels and direct sourcing is expected to support business growth, while lower funding cost, prudent underwriting and healthy asset quality provide earnings visibility. Revival in business growth to act as trigger to boost valuation. Execution of the Roadmap 2028 strategy and moderation in prepayment remain key monitorable. We expect RoA to sustain at 2.3% in FY27E-28E. Accordingly, we revise our target to ₹1,050 (earlier ₹1,100), valuing the business at ~1.8x FY28E BV. Maintain Buy rating.
