Can Fin homes has appointed Suresh Iyer, ex Bandhan Bank housing vertical head, as the new CEO. We believe this is a positive given Iyer’s long experience in the mortgage industry including as core management at Gruh Finance. We watch out for the new CEOs strategy to drive growth and manage NIMs in the near and medium term.
Business and growth strategy to be the key: Can Fin has reported stable asset quality over the years across managements, but growth has varied. New CEOs strategy to drive growth and manage margins would be the key in this context. Can Fin has targeted mid-sized salaried housing segment with average ticket size of Rs 2.4mn vs. Rs 1.4mn at Bandhan Bank and Rs 0.9mn at erstwhile Gruh Finance before merger. Our channel feedback suggests Can Fin has seen rise in attrition at branches and mid management levels in the last six months. Disbursement growth at Can Fin also moderated in Q3FY23 (-1.1% y-o-y). Thus near term, Iyer would have to manage attrition, hire to plug in the gaps, and energize the team to drive growth.
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We believe margins at Can Fin can surprise positively after rates stabilise due to lag between repricing of loans and liabilities. 72% of its loans are yet to fully reflect the home loan rate hikes taken YTD FY23 as borrowers home loan rates are reset on an annual basis. Liabilities are mostly repriced within the quarter. We see some moderation in loan growth, though it should still be healthy. It should deliver 16% EPS CAGR and 18% ROE over FY23-25e.