CANFINHOME - Can Fin Homes

📊 NSE: CANFINHOME 🏢 Finance - Housing 📅 Last Updated: 12/13/2025 20:39

💰 Financial Performance

Revenue Growth by Segment

Net Interest Income (NII) grew 16% YoY to INR 767 Cr in H1FY26 from INR 660 Cr. The Outstanding Loan Book (AUM) reached INR 39,657 Cr, an 8.4% increase YoY. New Approvals grew 3% to INR 4,739 Cr, while Disbursements increased 8% to INR 4,560 Cr, driven by steady demand in the housing segment.

Geographic Revenue Split

Operations are heavily concentrated in South India, which contributes 68% of total advances and houses 56% of the 234 branches. The company aims to reduce this concentration to 60% by March 2028 by expanding into Northern and Western regions.

Profitability Margins

Profit After Tax (PAT) increased 16% YoY to INR 475 Cr in H1FY26. Net Interest Margin (NIM) improved to 3.83% from 3.65% YoY. The Spread increased to 2.79% from 2.56% YoY, reflecting efficient management of borrowing costs despite competitive pressures.

EBITDA Margin

Operating Profit grew 13% YoY to INR 639 Cr in H1FY26 from INR 567 Cr. Return on Average Assets (ROA) improved to 2.32% from 2.22% YoY, while Return on Average Equity (ROE) remained stable at 17.40% compared to 17.49% in the previous year.

Capital Expenditure

Not disclosed in available documents as the company is a financial services provider; however, internal accruals are stated to be sufficient to meet medium-term growth plans without immediate equity dilution.

Credit Rating & Borrowing

Maintains a 'CARE AAA; Stable' and 'IND AAA; Stable' rating. The average cost of borrowing decreased to 7.29% in H1FY26 from 7.56% in H1FY25. The company utilizes a diversified mix: Banks (52%), NCDs (23.6%), NHB Refinance (17%), and Commercial Papers (7.4%).

⚙️ Operational Drivers

Raw Materials

The primary 'raw material' is capital/debt. Cost of borrowing represents the main operational cost, which stood at 7.29% in H1FY26. Interest expenses are the largest cost component, impacting the spread which is currently 2.79%.

Import Sources

Not applicable for a housing finance company.

Key Suppliers

Major funding suppliers include Canara Bank (7.2% of funding), National Housing Bank (NHB) (17% of funding), and various institutional investors through NCDs (23.6%) and Commercial Papers.

Capacity Expansion

Current network consists of 234 branches. The company is actively expanding in North and West India to mitigate regional concentration, with a goal to reduce South India's AUM share from 68% to 60% by FY28.

Raw Material Costs

Cost of borrowing decreased by 27 bps YoY to 7.29%. The strategy involves moving MCLR-linked bank loans to Repo-linked loans to ensure faster transmission of rate cuts and protect the 2.79% spread.

Manufacturing Efficiency

Average business per branch stood at INR 160 Cr, and average business per employee was INR 30 Cr in H1FY26. Cost-to-Income ratio increased to 18.45% from 16.01% YoY due to expansion and operational investments.

Logistics & Distribution

Sourcing mix is dominated by DSAs at 79%, followed by the internal marketing team at 10% and direct walk-ins at 10%. Digital sourcing is currently 1% with a target to reach 10% by FY28.

📈 Strategic Growth

Expected Growth Rate

8.40%

Growth Strategy

Growth will be achieved by expanding the branch network in North and West India, increasing the share of the Self-Employed Non-Professional (SENP) segment from 30% to 35% by FY28, and leveraging digital sourcing to reach 10% of total sourcing. The company also plans to increase NHB refinancing to lower overall funding costs.

Products & Services

Housing loans (74% of AUM), Housing CRE (11%), Loan Against Property (LAP) (7%), Top-up loans (2%), and other mortgage-related products.

Brand Portfolio

Can Fin Homes Limited (promoted by Canara Bank).

New Products/Services

Increased focus on the SENP (Self-Employed) segment and digital lending products, expected to contribute to a more diversified AUM mix by FY28.

Market Expansion

Targeting non-southern states to balance the portfolio; specifically expanding in Northern and Western India to reduce Southern concentration to 60% by March 2028.

Market Share & Ranking

Sizeable player in the housing finance industry with an AUM of INR 39,657 Cr.

Strategic Alliances

Strong linkage with Canara Bank (29.99% stakeholder), providing board-level guidance, shared branding, and a credit line that supports a competitive cost of funds.

🌍 External Factors

Industry Trends

The industry is shifting from informal to formal credit. Competitive pressure from banks is high, but CFHL positions itself through niche focus on salaried and professional segments and operational efficiency (18.45% Cost-Income ratio).

Competitive Landscape

Faces intense competition from commercial banks and other HFCs. CFHL maintains an edge through a low-risk profile (74% pure housing loans) and competitive interest rates.

Competitive Moat

Moat is derived from 'AAA' credit rating and Canara Bank parentage, allowing access to low-cost funds. This is sustainable as long as asset quality (GNPA < 1%) and parent support remain intact.

Macro Economic Sensitivity

Sensitive to interest rate cycles and residential real estate demand. A rise in interest rates could impact the repayment capacity of the 30% SENP segment, potentially increasing the 0.94% GNPA.

Consumer Behavior

Increasing preference for digital loan processing and a shift toward formal housing finance in the self-employed segment.

Geopolitical Risks

Low direct impact as operations are domestic; however, global macro shifts affecting Indian interest rates (Repo rate) directly impact the cost of funds.

⚖️ Regulatory & Governance

Industry Regulations

Regulated by the National Housing Bank (NHB) and RBI. Capital Adequacy Ratio (CRAR) is 25.58%, significantly above the statutory 15% requirement. Liquidity Coverage Ratio (LCR) is 148.4%.

Taxation Policy Impact

Effective tax rate is approximately 22% (PBT INR 609 Cr vs PAT INR 475 Cr in H1FY26).

Legal Contingencies

The company noted instances of fraud at one branch in the previous year, which led to strengthened governance and quarterly monitoring visits by Canara Bank.

⚠️ Risk Analysis

Key Uncertainties

Potential for asset quality deterioration in the SENP segment (30% of AUM). High leverage (6.61x) remains a risk if market volatility affects the ability to roll over short-term debt (CPs and NCDs).