Investor's Eye: Update - CanFin Homes

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Investor's Eye [April 11, 2014]  Sharekhan www.sharekhan.com

Summary of Contents STOCK UPDATE   CanFin Homes Recommendation: Buy Price target: Rs275 Current market price: Rs231   Still attractive in spite of sharp appreciation; price target revised to Rs275   Key points CanFin Homes has appreciated by 75% in the past 16 months since our initiation report in December 2012. However, the stock is still trading at attractive valuation (0.8x FY2016E its book value) in absolute terms as well as compared with some of its peers. Moreover, the company is expected to show a healthy CAGR of 28% (over FY2013-16) in earnings. It will also improve its already superior return ratios (RoE of 20%) and does not have any asset quality issues. We expect a robust growth of 35% in its earnings during Q4FY2014. Consequently, we retain our positive stance on the stock. We are rolling over our price target on FY2016E valuation and our revised price target is Rs275 (over 20% upside from the current levels). We maintain our Buy rating on the stock. In the NBFC space, we prefer LIC Housing Finance among the larger companies and CanFin Homes in the mid-cap space. Risk to our call: An unexpected spike in interest rates and any change in the top management (the current management team has renewed focus on expansion and any sudden change would be taken negatively) are the key risks.  Click here to read report: Investor's Eye     Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.

Regards,  The Sharekhan Research Team

 

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