Housing Finance companies have played a very vital role in the last 10 odd years in helping individuals buy their dream homes. We believe, besides getting your houses financed, one can also consider starting investing at a young age in fundamentally strong, fast growing and reasonably valued companies from the Housing finance space so as to reduce the quantum and the tenure of your home loan at the time of buying your house.
HDFC, Gruh Finance, LIC Housing Finance are some of the very well known listed Housing Finance companies, however we would like to share details with you on another Housing Finance stock i.e. Can Fin Homes Ltd (NSE Code – CANFINHOME) which until recently was growing at 7-8%, however the renewed focus from the management and the aggressive branch expansion promises better growth prospects for the next few years.
The detailed findings on Can Fin Homes (NSE Code – CANFINHOME) were shared with Alpha and Alpha plus members in May 2013 at around levels of 155 (CMP – 480).
Though you may not have seen or heard of Can Fin Homes, Canara Bank is a relatively well known bank and is the promoter of Can Fin Homes Ltd (CFHL) with 42.38% stake at the end of Mar’13.
CFHL pre-dominantly offers loans for home purchase, home construction, home improvement/extension and site purchase as well as non-housing finance loans such as Personal loans, Child education loans, etc. Housing loans constitute ~98% of the advances of the company.
Most of the branches of the company are located in South India (~65%) and that too outside cities as the company caters to individual customers requiring relatively smaller loans (of up to Rs 10-15 lakhs). As per the various reports, about 98% of the company’s loans is to individuals (salaried and self-employed) and about 2% is in the corporate segment.
We believe higher share of loans to individuals lends robustness to the asset quality of the company as owning a house is one of the basic necessities with very strong emotional value attached to it for an individual and his/her family.
Our view is also corroborated by the fact that at the end of FY 12 CFHL’s Gross NPA was just 0.8% while the Net NPA was nil.
Detailed note on Can Fin Homes can be downloaded here: Can Fin Homes Ltd (NSE Code – CANFINHOME) – May’13 Katalyst Wealth Alpha recommendation from Katalyst Wealth