Mortgage lender Can Fin Homes plans to raise Rs 2,000 crore via NCDs

Mortgage lender Can Fin Homes Ltd plans to raise ₹2,000 crore through five-year non-convertible debentures (NCDs) during the current financial year.

 

Bengaluru-based housing finance company has shifted entire bank borrowing to repo rate or Treasury bill as benchmark, helping to reduce cost of funds. It expects to pass on the benefit of reduction in cost of funds by slashing lending rates by 10-15 basis points in the near term.

 

Suresh Iyer, managing director and chief executive, Can Fin Homes told Business Standard that the firm has already begun discussion with market participants for prospective investments in NCDs.

 

Incrementally the share of NCDs would go up from around 20 to 21 per cent. There is regulatory push for entities to incrementally raise more amounts through market instruments.

 

 

At the beginning of the third quarter of financial year 2025 (Q3FY25), Can Fin had about 35 per cent of bank borrowings linked to Marginal Cost based Lending Rate (MCLR). The borrowings are now linked repo and T-bill and HFC has been able to slightly negotiate the rate of interest on the term loans.

 

According to ICRA Ratings, the company’s funding profile remains fairly diversified. As of September 2024, 56 per cent of the overall funding comprised borrowings from banks, followed by non-convertible debentures (NCDs 19 per cent), National Housing Bank (18 per cent), commercial paper (6.0 per cent) and deposits (1.0 per cent).

 

Its net interest margins moderated to 3.73 per cent in December 2024 from 3.92 per cent a year ago. The yield on loan portfolio moved up to 10.19 per cent in Q3FY25 from 9.91 per cent in December 2023. The cost of borrowings rose to 7.51 per cent from 7.35 per cent. The loan portfolio rose by 9 per cent year-on-year (Y-o-Y) to ₹37,155 crore as at December 2024, according to an analyst’s presentation.

 

Referring to policy on bank borrowings and refinance window, he said besides shifting loans to external benchmark rates, it has also tapped the refinance window of National Housing Bank. This has helped the company to reduce the cost of funds. It raised ₹1,600 crore during the quarter from NHB, which has come at a lower rate of approximately 7.6 per cent, which is lower by 30 to 35 bps compared to the bank borrowing.

 

The housing finance lender expects to pass on 10-15 basis points as rate reduction as benefit from reduction in cost of funds. This could be around the end of March or early next year, Iyer added.