Can Fin Homes Q1 Results Review - Soft Quarter, Execution On Guidance Key: Yes Securities

Yes Securities Report

Can Fin Homes Ltd. delivered a miss versus our expectation on disbursements, margins, and credit cost. Disbursements were moderate at Rs 18.5 billion (-20% QoQ/-6% YoY), causing further deceleration in loan book growth (up 1.6% QoQ/9.4% YoY).

Disbursement volume was impacted by elections and transient issues in key markets of TL and AP. The spread/net interest margin contracted by 13 bps/16 bps on sequential basis with cost of fund rising by 18 bps on account of-

1. material increase in share of NCD borrowings over past Q2s,

2. full-quarter impact of higher-rate CP borrowings during March and

3. further decline in share of low-cost NHB borrowings.

Opex was significantly lower versus Q4 FY24 due to absence of one-off/non-recurring cost (Rs 80-90 million), much lower disbursements (80% loans via DSAs) and the usual seasonality in employee cost. 1+ dpd increased by 11% on sequential basis with SMA pool swelling by 10.5% and gross non-performing loans rising by 14%. Such increase in NPLs in the first quarter has been a trend with Can Fin.

Credit cost was higher at Rs 245 million (ann. 28 bps) owing to significant increase in delinquent pool. There was no write-off in the quarter, neither there was any utilization of management overlay (Rs 340 million). Return on asset/return on equity for the quarter stood at 2.2%/17.5%.

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