Can Fin Homes surges 4% as Canara Bank invites bids for stake sale

Shares of Can Fin Homes gained as much as 3.75 per cent to Rs 406.45 apiece on the BSE in the morning deals on Monday after the parent firm Canara Bank invited bids to sell 30 per cent stake in the housing finance company. 

Bids have been invited through merchant bankers for sale of 3,99,30,365 equity shares of the face value of Rs 2 each, constituting 29.99 per cent, Canara Bank said on Friday in a regulatory filing. 

The decision to invite bids comes ahead of amalgamation of Syndicate Bank with Canara Bank.

Last year, Canara Bank had called off move to divest entire shareholding in housing finance subsidiary Can Fin Homes after receiving lower than expected price quotation, said a PTI report. 

For the quarter ended June 30, Can Fin Homes reported 10.6 per cent year-on-year (YoY) rise in net profit, aided by 18 per cent growth in net interest income (NII), cost-income ratio of 15.4 per cent and 17 per cent increase in pre-provisioning profit. Loan book grew 17.4 per cent YoY to Rs 19,003 crore. However, the gross non-performing assets (NPAs) were higher by 11 basis points (bps) quarter-on-quarter (QoQ) to 0.73 per cent due to higher slippages in Q1.

Over the coming quarters, the recoveries are expected to improve by way of SARFAESI (The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002) along with a pick-up in loan growth (especially in non-south and non-metro regions), note analysts at Centrum Broking. 

"We estimate the loan CAGR (compound annual growth rate) of 26 per cent with gross NPAs declining to 0.4 per cent and RoA/RoE higher at 1.9 per cent/22.3 per cent by FY21E. Hence, we maintain our long term buy rating on the stock with a revised target price of Rs 470, valuing it at 2.5x its FY21E ABV (accredited in business valuation), Payal V Pandya, Assistant Vice President - Wealth Research at Centrum Broking, wrote in a report dated August 13. 

At 11:22 am, shares of Can Fin Homes were trading 2.58 per cent higher at Rs 401.95 apiece on the BSE. A total of 2,15,861 shares changed hands on the BSE and NSE in the trade so far. Canara Bank, on the other hand, was trading nearly a per cent higher at Rs 193.25 apiece. 

In comparison, the benchmark S&P BSE Sensex was trading 192 points or 0.52 per cent higher at 37,173.87 levels.