Can Fin Homes slips on credit rating downgrade

Can Fin Homes fell 1.45% to Rs 400.60 after India Ratings & Research (Ind-Ra) revised the long-term issuer rating of the company to IND AA' from 'IND AAA'.

The outlook is revised to stable from negative. Further, Ind-Ra affirmed IND A1+ rating on commercial paper worth Rs 45 billion. The announcement was made during market hours today, 19 December 2019.

The credit rating is driven by the standalone credit profile of CFHL since Canara Bank has indicated its intention of selling its stake in the company as part of mobilising capital in light of government's direction. Further, the key rating drivers are indicated as Canara Bank's capital-raising plan includes the company's stake sale, proven track record and granular loan book of the company, moderately diversified resource profile though largely institutional funded, liquidity indicator as adequate, credit cost under control, above average leverage and stable profitability.

Shares of Can Fin Homes declined 4.43% in two trading sessions to its current market price of Rs 400.60 from its recent closing high of Rs 419.20 on Tuesday, 17 December 2019.

The Nifty 50 index rose 20.25 points or 0.17% at 12,241.90.

In the past one month, shares of Can Fin Homes rose 1.79% to its current market price of Rs 400.60, underperforming the Nifty Financial Service index's 4.34% rise in the same period.

On the technical front, the stock's RSI (relative strength index) stood at 49.145. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.

The stock was currently trading above its 50-day moving average (DMA) placed at 398.38 as well as above its 200 DMA placed at 365.72. Both these levels would act as a support in the near term.

On a standalone basis, Can Fin Homes' net profit rose 19.7% to Rs 97.62 crore on 18.7% surge in total income to Rs 500.67 crore in Q2 September 2019 over Q2 September 2018.

Can Fin Homes is a housing finance company. The firm offers housing loan to individuals; housing loan to builders/developers, and loan against property. Its loan portfolio includes housing loans and non-housing loans.

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