Shares of Can Fin Homes have surged 9% to Rs 589.70 in intraday trade on Friday after the company posted solid earnings for the June quarter, driven by a 49% year-on-year profit after tax (PAT) to Rs 1.62 crore Push assignments via spares callback.

Operating profit before provision (PPOP) rose 10% quarter-on-quarter and 40% year-on-year to Rs 215 crore.
Shares were up 7% at Rs 578 at 9.40 am, while the S&P BSE Sensex was up 0.41%. It reached a 52-week high of Rs 721.25 in October 2021.

Housing Finance Corporation’s (HFC) asset quality was stable month-on-month, with gross non-performing assets (GNPA) and net NPA ratios of 0.65% and 0.3%, respectively. Year-over-year, GNPA and NNPA improved by 25 basis points and 27 basis points, respectively. Net interest income (NII) rose 38% YoY and 5.5% QoQ to Rs 250 crore.

In addition, Can Fin Homes have said disbursements for the quarter were up 92.68% year-on-year, while loan volume reached Rs 27,538 crore (up 24%) with a customer base of 2.15 lakh.

“Bank borrowing increased to 54% from 47% a year ago, while the share of commercial paper (CP) was stable at 11% month-on-month. Asset quality has weathered the pressures of the pandemic with strong resilience. We expect what is represented in the results update Motilal Oswal Financial Services lending trajectory will remain healthy.

Until a few quarters ago, Can Fin Homes’ loan growth had slowed due to increased enthusiasm from banks and large HFCs. It survived that period by sacrificing spread/margin to protect its clients from poaching by competitors. This strategy has paid off, with Can Fin Homes again on a strong loan growth trajectory and the ability to maintain its spread/margin. From an investor’s perspective, sustainable profit margin levels are essential. The brokerage added that its asset quality is very pristine, and credit costs should remain benign.