Target: ₹1,130
CMP: ₹898.50
Can Fin Homes gave an overall strong performance in Q3 FY26 which was characterised by disbursement scale-up as guided (up 7 per cent q-o-q), incremental expansion of portfolio spread, further reduction of delinquent pool (SMA loans down 7 per cent q-o-q/28 per cent y-o-y) and robust RoA/RoE of 2.6/19 per cent (multi-quarter high).
Balance transfers (including loan closure from own money) remained elevated at about ₹400 crore for second consecutive quarter, impeding portfolio accretion to 2.6 per cent q-o-q (restricting loan growth to 10 per cent y-o-y).
Key monitorables for Can Fin over next few quarters would be incremental disbursements scale-up, impact of IT transformation, BT volume and the trajectory of margin correction. With conservative expectations (than Management guidance) on disbursements, IT system changes impact and spread contraction, we estimate Can Fin Home’s loan growth at 13/14 per cent in FY27/28 and RoE at 18/17 per cent.
Even with this Growth-RoE context, the valuation looks attractive on FY28 basis (1.6 P/BV & 9.5 P/E). Rolling over the target multiple to FY28, we raise the 12 month price target to ₹1,130 and retain Buy on the stock.