Can Fin Homes Q2 Review: Strong On Profitability, Weak On Growth, Says HDFC Securities
Can Fin Homes Ltd.’s Q2 FY26 earnings were ahead of estimates, largely due to higher-than-expected net interest margins (4%) and muted credit costs (3bps). The company’s strong profitability was driven by a sharp reflation in NIMs, which was a result of lower cost of funds (-30bps QoQ) due to the re-pricing of bank borrowings.
Net Interest Margins (NIMs) Reflate Sharply
The re-pricing of bank borrowings led to a significant reduction in the cost of funds, which in turn contributed to the sharp increase in NIMs. This increase in NIMs is a positive development for the company, as it will help to boost profitability. However, the transmission on the asset side remained limited, with only a 25bps increase during FY26.
AUM and Disbursements Growth Remain Tepid
Despite the strong profitability, the company’s AUM and disbursements growth remained tepid, with an increase of 8.4% and 6.9% YoY, respectively. This slow growth can be attributed to the moderation in overall housing demand, as well as protracted issues in Karnataka and Telangana. The company’s growth is likely to remain impacted until these issues are resolved.
For investors looking to invest in the stock market, it is essential to keep a close eye on the company’s growth prospects and the overall Indian stock market trends. The Nifty and Sensex news can have a significant impact on the company’s stock price, and investors should be aware of the latest developments.
HDFC Securities Maintains ‘Buy’ Rating
Despite the weak growth, HDFC Securities has maintained its ‘Buy’ rating on the stock, citing the company’s strong profitability and potential for future growth. The brokerage firm believes that the company’s NIMs will continue to improve, driven by the lower cost of funds, and that the growth will pick up once the issues in Karnataka and Telangana are resolved.
Investors looking to invest in Can Fin Homes should consider the company’s strong profitability and potential for future growth. However, they should also be aware of the risks associated with the company’s slow growth and the impact of the Indian economy news on the company’s stock price.
Conclusion
In conclusion, Can Fin Homes Ltd.’s Q2 FY26 earnings were ahead of estimates, driven by higher net interest margins and muted credit costs. However, the company’s AUM and disbursements growth remained tepid due to moderation in housing demand and protracted issues in Karnataka and Telangana. HDFC Securities has maintained its ‘Buy’ rating on the stock, citing the company’s strong profitability and potential for future growth.
Investors should keep a close eye on the company’s growth prospects and the overall Indian stock market news. They should also consider the Nifty and Sensex trends and the impact of the Indian economy trends on the company’s stock price. By doing so, they can make informed investment decisions and maximize their investment returns.
