BUY BUY - InvestmentGuruIndia

CAN FIN HOMES LIMITED
Result Update (PARENT BASIS): Q3 FY15
BUY
CMP
625.10
Target Price
731.00
JANUARY 28th 2015
ISIN: INE477A01012
Index Details
SYNOPSIS
Stock Data
Sector
BSE Code
Face Value
52wk. High / Low (Rs.)
Volume (2wk. Avg. Q.)
Market Cap (Rs. in mn.)
Can Fin Homes Ltd (CFHL) focus on individual loan
segment, which has a high growth potential, extend
its business operations in potential places and on
non-housing loans.
Housing Finance
511196
10.00
665.17/147.04
86000
12805.17
Revenue of the company registered 41.98%
increase and stood at a record of Rs. 2155.23
million for Q3 FY15 against Rs. 1517.97 million for
the prior period Last year.
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS
FY14A
Net Sales
EBITDA
Net Profit
EPS
P/E
5780.04
5316.53
757.12
36.96
16.91
FY15E
FY16E
8175.67
7572.49
904.21
44.14
14.16
10056.08
9342.10
1038.64
50.70
12.33
Net profit stood at Rs. 259.50 million against Rs.
203.49 million in the corresponding quarter
ending of previous year. An increase of 27.52% yo-y.
In Q3 FY15, Earnings before Interest, Dep and Tax
was at Rs. 2010.19 million and against Rs. 1407.75
million in Q3 FY14. An increase of 38.42% y-o-y.
Shareholding Pattern (%)
As on 31st Dec 2014, Company sanctions and
disbursements stood at Rs. 9161.90 million and Rs.
8525.20 million respectively.
In the nine months ended of FY15, the company
registered a growth of 41.71% in Net sales to Rs.
5899.75 million from Rs. 4163.36 million in the nine
months ended of FY14.
1 Year Comparative Graph
Loan book and Borrowings of the company stood at
Rs.76340.00 million and Rs. 70330.00 million
respectively as on 31st Dec, 2014.
Can Fin Homes has a network of 106 branches & 8
Satellite Offices across 19 states as on 31st Dec,
2014.
Net Sales and PAT of the company are expected to
grow at a CAGR of 37% and 24% over 2013 to
2016E respectively.
CAN FIN HOMES LIMITED
BSE SENSEX
PEER GROUPS
CMP
MARKET CAP
EPS
P/E (X)
P/BV(X)
DIVIDEND
Company Name
(Rs.)
Rs. in mn.
(Rs.)
Ratio
Ratio
(%)
625.10
670.95
483.00
485.65
12805.17
41834.30
62138.20
245089.60
36.96
18.63
46.65
27.31
16.91
36.01
10.35
17.78
2.83
5.64
1.74
3.25
65.00
12.00
80.00
225.00
Can Fin Homes Ltd
Repco Home Finance Ltd
Dewan Housing Finance Ltd
LIC Housing Finance Ltd
Analysis & Recommendation - ‘BUY’
For the quarter ended 31st Dec 2014, Can Fin Homes Ltd reported its net sales of Rs. 2155.23 million against Rs.
1517.97 million in previous year period, which represents growth of 41.98%. For Q3 FY15, EBIDTA was Rs.
2010.19 million, an increase of 42.79% against Rs. 1407.75 million in Q3 FY14. The company earned profit after
tax of Rs. 259.50 million against Rs. 203.49 million in corresponding quarter of previous year. Profit before Tax
(PBT) at Rs. 399.87 million in Q3 FY15 as against Rs. 288.89 million in Q3 FY14, registered a growth of 38.42% yo-y. With a view to sustain and enhance its performance level, Company is offering a range of housing as well as
non-housing products, with more emphasis on marketing and customer oriented business relationship.
In the nine months ended of FY15, the company registered a growth of 41.71% in Net sales to Rs. 5899.75 million
from Rs. 4163.36 million in the nine months ended of FY14. Net profit grew by 13.95% to Rs 633.56 million for
the end of 9M FY15 from Rs 556.00 million for the end of 9M FY14. The company’s operating profit or EBIDTA
grew by 42.87% of Rs. 5435.40 million for the 9 months end of FY15 compared to Rs. 3804.56 million for the 9
months end of FY14. As on 31st Dec 2014, Company sanctions and disbursements stood at Rs. 9161.90 million
and Rs. 8525.20 million respectively. Loan book and Borrowings of the company stood at Rs.76340.00 million
and Rs. 70330.00 million respectively as on 31st Dec 2014. Net worth of the company stands at Rs. 5160.00
million as on 31st Dec 2014. The Indian economy is one of the fastest growing economies in the world and the
GDP growth is expected to improve further in 2014-15. The real estate sector witnessed a good growth in the last
few years. The demand for commercial property is being driven by the economic growth of the Country. As such,
a sharp increase in demand for residential units and also commercial real estate are foreseen.
Can Fin Homes Ltd expects to maintain a sustained growth in its performance levels during 2014-15 and has put
in place a well-drawn vision document. However, given the indications about the likely changes in cost of funds
and expectations of borrowers for availing loans at lesser rates, the margins are expected to continue to be under
pressure. The Company would continue to give a more focused attention for lending to individual loan segment,
project loans and non-housing loans with an emphasis to further enhance its market share in the housing market
segment. Over FY2013-16E, we expect the company to post a CAGR of 37% and 24% in its top-line and bottomline respectively. Hence, we recommend ‘BUY’ for ‘CAN FIN HOMES LTD’ with a target price of Rs.731.00 for
medium to long term investment.
QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q3 FY15,
Can Fin Homes Ltd’s main business is to provide
Months
Dec-14
Dec-13
% Change
Net Sales
2155.23
1517.97
41.98
Housing Loans and reported its financial results for
PAT
259.50
203.49
27.52
the quarter ended 31st Dec, 2014.
EPS
12.67
9.93
27.52
2010.19
1407.75
42.79
loans for the purchase and construction of
residential houses, 88% of loans are retail Individual
EBITDA
The company has achieved a turnover of Rs. 2155.23 million for the 3rd quarter of the financial year 2015 as
against Rs. 1517.97 million in the corresponding quarter of the previous year. In Q3 FY15, EBITDA stood at Rs.
2010.19 million and increase of 42.79% against the prior period previous year. In Q3 FY15, net profit of Rs.
259.50 million against Rs. 203.49 million in Q3 FY14. The company has reported an EPS of Rs. 12.67 for the 3rd
quarter as against an EPS of Rs. 9.93 in the corresponding quarter of the previous year.
Break up of Expenditure
During Q3 FY15, total Expenditure rose up by 36% per cent mainly on account of employee benefits expenses by
33% to Rs. 62.10 million against Rs.46.56 million in Q3 FY14. In Q3 FY15 other Expenses stood at Rs. 82.93
million against Rs. 63.66 million in Q3 FY14. Whereas Depreciation and amortization by 162% to Rs. 9.99 million
in 3rd quarter of FY15 from Rs. 3.81 million over the Corresponding quarter of previous year. Total expenditure
in Q3 FY15 stood to Rs. 155.03 million as against Rs. 114.03 million in Q3 FY14.
COMPANY PROFILE
Can Fin Homes established in the year 1987, and is promoted by Canara Bank in association with reputed
financial institutions including HDFC and UTI. The relevance of having an exclusive outfit for providing housing
finance at a time when institutional finance was not flowing to the housing sector to the required extent and
banks had constraints in locking up funds in long term housing finance saw the birth of CFHL.
It was promoted in 1987, the "International Year for Shelter for the Homeless" by Canara Bank in association
with reputed financial institutions including HDFC and UTI. Can Fin Homes is the first bank sponsored Housing
Finance Company in India and one among the top players in the country's housing finance sector. The expertise
gained by us in housing finance over the years gives us the confidence to come up to expectations. A unique
personal touch in service makes us different from others.
CFHL was set up with the mission of promoting home ownership and increasing housing stock all over the
country. The housing finance company has a standing of over 22 years. It is one among the four HFCs selected by
NHB in its first phase of securitization programme has an all-India presence with a network of 106 branches in
over 19 states as on 31st Dec 2014.
Business Areas
Housing Loans
•
Loan for Rural Housing (LRH)
•
Housing Loan Individual
•
Home Loan for NRI.
Non Housing Loan
•
Personal Loan
•
Site Loan
•
Mortgage Loan
•
Loan against Property
•
Child Education Loan.
Deposit Scheme
Can Fin Homes has the unique privilege of meeting the varied financial requirements of its customers, be it as a
reliable home finance provider or as a competent fixed deposit accepting company.
•
Fixed Deposit
•
Cumulative Deposit
•
Fixed Deposit Scheme for Senior Citizen
•
Cumulative Deposit Scheme for Senior Citizen
•
Can fin Trust Fixed Deposit Scheme
•
Can fin Trust Cumulative Deposit Scheme.
Recognitions
•
CFHL enjoys 5 Star rating from NHB for the purpose of refinance.
•
CFHL's Deposit programme enjoys 'MAA+' rating, which is the highest possible under high safety rating.
Location & Branches
•
Chandigarh
•
Bhubaneswar
•
Chennai
•
Noida
•
Mumbai
•
Hosur
•
Gurgaon
•
Navi Mumbai
•
Mysore
•
New Delhi
•
Pune
•
Pondicherry
•
Jaipur
•
Hyderabad
•
Coimbatore
•
Luck now
•
Visakhapatnam
•
Calicut
•
Raipur
•
Vijayawada
•
Cochin
•
Patna
•
Goa
•
Trichy
•
Ahmadabad
•
Hubli
•
Trichur
•
Bhopal
•
Davangere
•
Madurai
•
Indore
•
Bangalore
•
Thiruvananthapuram.
•
Vadodara
•
Mangalore
FINANCIAL HIGHLIGHT (PARENT BASIS)
(A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31, 2013A-2016E
CAN FIN HOMES LTD.
FY-13A
FY-14A
FY-15E
FY-16E
a) Capital
204.88
204.88
204.88
204.88
b) Reserves and Surplus
3716.83
4318.17
5112.71
5961.42
3921.71
4523.05
5317.59
6166.30
28992.58
43287.95
48049.62
52854.59
320.01
407.59
509.49
626.67
29312.59
43695.54
48559.11
53481.26
a) Short Term Borrowings
1736.68
3658.92
11269.47
15551.87
b) Other Current Liabilities
5366.30
6731.07
7942.66
9213.49
c)Short Term Provisions
332.76
507.88
584.06
665.83
7435.74
10897.87
19796.20
25431.19
40670.04
59116.46
73672.90
85078.75
I
EQUITY AND LIABILITES
1)
Shareholder's Funds
Sub -Total- Shareholder fund
2)
Non Current Liabilities
a) Long- Term Borrowings
b) Long Term Provisions
Sub-Total -Non - Current liabilities
3)
Current Liabilities
Sub-Total - Current Liabilities
TOTAL-EQUITY AND LIABILITES (1 + 2 + 3)
II
ASSETS
1)
Non- Current Assets
Fixed Assets
i.
Tangible Assets
65.00
78.16
92.23
106.99
ii.
Capital work in progress
2.94
0.00
0.00
0.00
a) Total Fixed Assets
67.94
78.16
92.23
106.99
b) Non-Current Investment
159.35
149.35
153.83
159.98
c) Deferred Tax Assets
48.75
48.65
51.08
54.15
39954.79
58306.15
72771.69
84083.94
40230.83
58582.31
73068.83
84405.06
a) Cash & Cash Equivalents
85.44
91.54
96.12
99.96
b) Short- Term Loans and Advances
349.73
438.05
503.76
569.25
4.04
4.56
4.20
4.49
439.21
534.15
604.07
673.70
40670.04
59116.46
73672.90
85078.75
d) Long Term Loans & Advances
Sub -Total- Non- Current Assets
2)
Current Assets
c) Other Current Assets
Sub -Total Current Assets
TOTAL-ASSETS(1 + 2)
Annual Profit & Loss Statement for the period of 2013A to 2016E
Value(Rs.in.mn)
FY13A
FY14A
FY15E
FY16E
Description
12m
3926.95
12m
5780.04
12m
8175.67
12m
10056.08
Other Income
0.00
0.00
0.00
0.00
Total Income
3926.95
5780.04
8175.67
10056.08
Expenditure
-334.29
-463.51
-603.18
-713.98
Operating Profit
3592.66
5316.53
7572.49
9342.10
Interest
-2830.11
-4227.67
-6129.61
-7662.01
Gross profit
762.55
1088.86
1442.88
1680.08
Depreciation
-11.59
-20.10
-41.70
-52.12
Exceptional Items
0.00
-2.24
0.00
0.00
Profit Before Tax
750.96
1066.52
1401.19
1627.96
Tax
-209.75
-309.40
-496.98
-589.32
Net Profit
541.21
757.12
904.21
1038.64
Equity capital
204.85
204.85
204.85
204.85
Reserves
3716.84
4318.17
5112.71
5961.42
Face value
10.00
10.00
10.00
10.00
EPS
26.42
36.96
44.14
50.70
Net Sales
Quarterly Profit & Loss Statement for the period of 30th June, 2014 to 31st Mar, 2015E
Value(Rs.in.mn)
30-Jun-14
30-Sep-14
31-Dec-14
31-Mar-15E
Description
3m
3m
3m
3m
1760.01
1984.51
2155.23
2275.92
Other income
0.00
0.00
0.00
0.00
Total Income
1760.01
1984.51
2155.23
2275.92
Expenditure
-128.22
-191.09
-145.04
-138.83
Operating profit
1631.79
1793.42
2010.19
2137.09
Interest
-1335.98
-1490.55
-1600.33
-1702.75
Gross profit
295.81
302.87
409.86
434.34
Depreciation
-4.83
-12.14
-9.99
-14.74
Profit Before Tax
290.98
290.73
399.87
419.61
Tax
-101.40
-106.25
-140.37
-148.96
Net Profit
189.58
184.48
259.50
270.65
Equity capital
204.85
204.85
204.85
204.85
Face value
10.00
10.00
10.00
10.00
EPS
9.25
9.01
12.67
13.21
Net sales
Ratio Analysis
Particulars
FY13A
FY14A
FY15E
FY16E
EPS (Rs.)
26.42
36.96
44.14
50.70
EBITDA Margin (%)
91.49
91.98
92.62
92.90
PBT Margin (%)
19.12
18.45
17.14
16.19
PAT Margin (%)
13.78
13.10
11.06
10.33
P/E Ratio (x)
23.66
16.91
14.16
12.33
ROE (%)
13.80
16.74
17.00
16.84
ROCE (%)
10.40
10.37
11.78
12.60
Debt Equity Ratio
7.84
10.38
11.16
11.09
EV/EBITDA (x)
12.09
11.22
9.51
8.68
Book Value (Rs.)
191.44
220.80
259.58
301.01
3.27
2.83
2.41
2.08
P/BV
Charts
OUTLOOK AND CONCLUSION
At the current market price of Rs. 625.10, the stock P/E ratio is at 14.16 x FY15E and 12.33 x FY16E
respectively.
Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.44.14 and
Rs.50.70 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 37% and 24% over 2013 to 2016E
respectively.
On the basis of EV/EBITDA, the stock trades at 9.51 x for FY15E and 8.68 x for FY16E.
Price to Book Value of the stock is expected to be at 2.41 x and 2.08 x respectively for FY15E and FY16E.
We expect that the company surplus scenario is likely to continue for the next three years, will keep its
growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of
Rs.731.00 for Medium to Long term investment.
INDUSTRY OVERVIEW
India’s financial services sector is diversifying and growing at a good rate. The sector is bank dominated with
commercial banks holding over 60 per cent of the total assets. The sector comprises commercial banks,
insurance firms, cooperatives, non-banking institutions, mutual funds, pension funds and other financial entities.
Housing Industry
During the current year, the RBI and Government have a stated Policy of managing inflation, promoting
investment through generation of employment and income. The Country’s economy was moving forward at a
snail’s pace during the financial year 2013-14 facing a sluggish macroeconomic situation. The income growth
slowed down, the rupee weakened continuously, inflation touched double digits and borrowing cost increased
during the financial year. Due to these reasons it was evident that the consumer confidence was affected to a
large extent and there was reluctance to invest.
Though the overall prices of residential properties in the Country continued to display an upward movement,
there was sluggish/downward trend in some parts of the country. In this scenario, the Country’s real estate
sector undoubtedly needed a fresh blend of progressive reforms to boost up confidence amongst home buyers as
well as investors. Major reforms in the form of Real Estate Regulatory Bill and the land Acquisition, Resettlement
and Rehabilitation Bills were initiated in the Parliament in the middle of the financial year gone by.
As on date, shortage of houses in India stands at 19 million units and a major portion of this housing shortage is
in the economically weaker sections and low income group categories. This demand is continuing to increase,
clearly indicating that there is a vast scope for development of affordable housing in the Country.
The housing loan/mortgage market in India constitutes 9% of the GDP. This is one of the lowest when compared
to some other emerging Asian economies like Malaysia, Thailand and China. In developed economies like
Switzerland, Netherlands and Denmark, this percentage is still higher. Deeper penetration of banks and financial
institutions into more urban and rural areas by way of opening branches and introduction of innovative
affordable housing loan products would help to develop the loan/mortgage market in the Country further.
Considering the importance of the housing sector as a major player towards generation of employment & income
and its contribution towards the GDP, policy based efforts are also being initiated to encourage and make the
sector more transparent. With the ever increasing demand for housing in the urban as well as in rural areas,
almost all banks and financial institutions have been vigorously active in the arena to grab a bigger share of the
market.
It is needless to say that the housing finance sector definitely shows signs of having a brilliant future in the years
to come due to reasons like increase in double income earning families, availability of more disposable income in
the hands of the individual and improved living standards, increase in population, urbanisation, fiscal incentives
provided by the government, younger generation’s wish for acquiring homes very early in life, the emergence
and continuation of nuclear family set up, shortage in supply of houses to meet the ever growing demand, easy
availability of finance/loans for acquiring houses, increase in rental income for residential units etc,.
OUTLOOK FOR 2014-15
Urbanisation and growing household income are a few factors influencing the demand for residential
accommodation and growth in the retail sector. The demand for rural housing is also on the increase. As such, a
sharp increase in demand for residential units and also commercial real estate are foreseen.
The Indian economy is one of the fastest growing economies in the world and the GDP growth is expected to
improve further in 2014-15. The real estate sector witnessed a good growth in the last few years. The demand
for commercial property is being driven by the economic growth of the Country.
Disclaimer:
This document is prepared by our research analysts and it does not constitute an offer or solicitation for the
purchase or sale of any financial instrument or as an official confirmation of any transaction. The information
contained herein is from publicly available data or other sources believed to be reliable but we do not represent that
it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be
in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for
the recipients’ investment decision based on this document.
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