Target is high for can Fin home

Can Fin Homes Ltd. (CANF) serves as the housing finance division of Canara Bank, with its headquarters situated in Bangalore. Primarily concentrated in South India, particularly in Tier 1 and Tier 2 cities, the company has showcased steady growth in its loan book, reaching Rs. 34,053 crore, marking a 13% increase year-over-year and a 2% rise sequentially. However, the transition to a central disbursement system led to operational adjustments, resulting in a temporary slowdown. With a client base now standing at Rs. 2.53 lakh, quarterly disbursements experienced a 9% year-on-year decline due to a fraudulent incident at the Ambala branch, prompting thorough audits across all branches and a general deceleration in branch operations.
Despite these challenges, the management foresees a resurgence in demand by the year’s end, propelled by the acquisition of customers through new channels, such as partnerships with developers. Maintaining a Net Interest Margin (NIM) within the range of 3.6% to 3.7% is anticipated, supported by completed repricing efforts and a favorable credit rating adjustment by ICRA. This adjustment is expected to alleviate pressure on the cost of funds.
With these factors in mind, the recommendation for the stock is an Accumulate rating, with a target price set at Rs. 900, based on twice the book value per share estimated for FY26.