Can Fin Homes sinks 8% after firm reports Rs 38 cr fraud at Ambala Branch

The company has undertaken legal action and expects one time impact on earnings, while, there will be no impact on assets quality.

Shares of Can Fin Homes slipped 8 per cent to Rs 782.50 on the BSE in Wednesday’s intra-day trade in an otherwise firm market after the company informed the stock exchanges regarding detection of a fraud at Ambala branch to the tune of Rs 38.5 crore by a branch employee.

In past two trading days, the stock has tanked nearly 14 per cent from its 52-week high of Rs 905, touched in Tuesday’s intra-day trade. In comparison, the S&P BSE Sensex was up 0.76 per cent at 66,861 at 10:29 AM today.

“The company has found that employees of Ambala branch have committed fraud over a period of time by transfer of funds to different personal bank accounts by misusing the cheque signing authority given,” Can Fin Homes said in an exchange filing.

The company has undertaken legal action and expects one time impact on earnings. There will be no impact on assets quality, the company said.

In past one week, the stock had rallied 13 per cent till yesterday, after Can Fin Homes reported strong earnings in June quarter (Q1FY24) with better operating profit before provision (PPoP) and profit after tax (PAT) led by net interest margin (NIM) beat and lower provisions. Asset quality blip was due to slippage from one-time restructuring (OTR) that was guided earlier.

Despite of past two day’s decline, thus far in the calendar year 2023, the stock price of Can Fin Home has appreciated by 43 per cent, as compared to 9.3 per cent rise in the S&P BSE Sensex.

Can Fin Homes remains upbeat on its loan growth guidance of ~18-20 per cent, despite the high competitive intensity. The newly[1] activated APF channel of sourcing is likely to contribute from Q2FY24 onwards, as also productivity gains from existing branches. Incremental loan growth is likely to be driven by higher ticket sizes (partly driven by the APF channel), branch additions and improved branch/employee productivity, analysts at HDFC Securities said.

“We have consistently upgraded earnings since the last 4 quarters and with likely PAT CAGR of 18 per cent over FY23-26E, there are levers for further earnings upgrade given (1) 38 per cent of loans are to be repriced upwards in FY24 (2) interest rates have peaked, high proportion of floating rate borrowings could benefit and (3) provisions could be lower as overlay is Rs 17 crore despite 70 per cent reduction in OTR pool,” analysts at Prabhudas Lilladher said in Q1 result update.