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Informist, Friday, Jul. 18, 2025

By Devanshi Verma

MUMBAI – Can Fin Homes Ltd. is expected to report a net loss for the June quarter against a profit it made in the previous quarter, partly due to increased competition from banks and larger housing finance companies, and partly due to a slowdown in the affordable housing segment, and an increase in costs, according to brokerages tracking the company.

The company has also shifted to a quarterly reset of interest rates from annual resets from January and this would have likely affected its earnings. Can Fin Homes is also implementing a total revamp of its technology and this would likely add to its costs. Nirmal Bang estimates the company's cost-to-income ratio at 20.5% for the June quarter, up sharply from 17.1% for 2024-25 (Apr-Mar) which is also the estimate for FY26.

The housing financier is expected to report a net loss of INR 2.16 billion for the June quarter, against a net profit of INR 2.3 billion in the March quarter, according to the average of estimates from four brokerages. Estimates for the housing finance company's net loss range from a low of INR 2.05 billion by Nirmal Bang to a high of INR 2.21 billion by Prabhudas Lilladher.

The company's net interest income for the reporting quarter is estimated to rise to INR 3.5 billion, up marginally from the previous quarter, according to the estimates. Prabhudas Lilladher has the lowest estimate for revenue at INR 3.49 billion while the highest estimate of INR 3.54 billion is by Mirae Asset Sharekhan.

However, Nirmal Bang expects the company to make a profit as loan disbursements in Karnataka have picked up. The monthly loan disbursements in Karnataka have shown improvement. Earlier, loan disbursals in Karnataka were hit by lack of linkage between sub-registrar databases and municipal corporation databases, which had hampered property verification.

The company is targeting around INR 26 billion of disbursement in Karnataka and INR 14 billion of disbursements in Telangana in FY26, Nirmal Bang said. These two states are the main areas of operations for the company, apart from Tamil Nadu where disbursements have not been affected by new rules.

Nirmal Bang estimates Can Fin Homes' FY26 loan disbursements at INR 105 billion, up 20% on year. Brokerages expect the company's assets under management to grow slower than the growth expected from other home financiers. Estimates for asset growth range from 10% to 13-15%. Can Fin's asset growth was below 10% in each of the four quarters of FY25.

The company plans to reduce its loan mix to 70% housing loans and 10% loans for commercial real estate, Nirmal Bang said. Currently, the company's housing loan portfolio, including loans to commercial real estate, accounts for 87% of its assets while the remaining 13% of the portfolio is non-housing loans. The company plans to increase its non-housing loans and reduce its geographical concentration in south to 60% from the current 72%, Nirmal Bang said. This will mean expanding branches in north and west of the country. Can Fin is set to open 15 new branches in FY26.

"As the company is passing on rate cuts to customers after receiving benefit on the cost side, its (yield) spreads are expected to remain stable," said Nirmal Bang. Incremental disbursements are at a yield of 9.8%, lower than the 10.1% yield on the older loan book.

The company's one-time revamp of its IT system will be completed by October, almost two months before schedule. The impact of the new technology on disbursements will be seen after the revamp is completed. Over the next few years, the company wants to reduce the share of direct selling agents in the sourcing mix to 60% from 82% in the fourth quarter of FY25.

The company will announce its quarterly earnings Saturday. Investors will keenly watch the management's commentary on the housing sector as demand for affordable housing has slowed down. "Commentaries on loan growth and outlook on NIM in a declining rate environment are the key monitorables," Motilal Oswal Financial Services said.

Friday, shares of Can Fin Homes ended at INR 817 on the National Stock Exchange, down 1.7%. The stock is up almost 10% from Apr. 23 when the company reported its earnings for the March quarter.

Of the 13 research reports on the stock available with Informist, 11 have a 'buy' or equivalent rating and two have a 'hold' rating on Can Fin. The average target price of the 'buy' recommendations is INR 893.

Following are the June quarter earnings estimates for Can Fin Homes based on reports from four brokerages in descending order of the estimate of net profit:

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Edited by Akul Nishant Akhoury

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