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Company Profile

A housing finance company (HFC) called Can Fin Homes Limited was supported by Canara Bank during the International Year of Shelter for the Homeless in 1987. The Nation’s first HFC to be floated by a nationalised bank was founded by Chairman Shri B Ratnakar. The company was founded with the primary goal of encouraging home ownership and expanding the supply of homes in the Nation. HDFC, UTI, Canara Bank, and Can Bank Financial Services were the company’s original investors. Listed in 1991, the company has a history of steady profits growth and dividend payments, with a 100% declared dividend since FY16. However, during the last 5 years, the company have been seeing increasing exposure to self-employed & non-professional (SE&NP) category. 

Real Estate and Housing Finance Industry In India

•   By 2040, the real estate market will grow to Rs. 65,000 crore (US$ 9.30 billion) from Rs. 12,000 crore (US$ 1.72 billion) in 2019 and will contribute 13% to the country’s GDP by 2025. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for India’s growing needs.

•  Indian real estate developers operating in the country’s major urban centres are poised to achieve a significant feat, with the completion of approximately 558,000 homes. Banking, financial services, and insurance (BFSI) firms held the highest share in leasing activity at 22% during 2023, with technology companies following closely at 21%. Engineering and manufacturing (E&M) companies accounted for 15%, and flexible space operators held 14%, showcasing their notable contributions.

•  The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform, which will allow all kind of investors to invest in the Indian real estate market and would create an opportunity worth Rs. 1.25 trillion (US$ 19.65 billion) in the Indian real estate market in the coming years. 

•   The residential sector is expected to grow significantly, under the ambitious Pradhan Mantri Awas Yojana (PMAY) scheme of the Union Ministry of Housing and Urban Affairs. Expected growth in the number of housing units in urban areas will increase the demand for commercial and retail office space also. The growing flow of FDI in Indian real estate is encouraging increased transparency. Developers, in order to attract funding, have revamped their accounting and management systems to meet due diligence standards. 

•  As per the current market research conducted by the CMI Research Team, the India Housing Finance Market size is expected to record a CAGR of 24.1% from 2024 to 2033. In 2024, the market size is projected to reach a valuation of USD 385.14 Billion. By 2033, the valuation is anticipated to reach USD 2,669.39 Billion.

•    Rapid urbanisation in the country, demographic divide, characterised by a young and growing population, fuels housing demand. With a rising number of young professionals entering the workforce and starting families, there is an increased need for housing finance to facilitate homeownership. This demographic trend presents a significant opportunity for housing finance companies to cater to the evolving needs of the burgeoning middle-class segment. 

•   Infrastructure projects, such as metro rail networks, highways, and smart cities, contribute to the growth of the housing finance market. As aspirations for homeownership continue to drive consumer behaviour, the surge in housing sector loans underscores the resilience and vitality of India’s real estate market.

Company Perspective and Review

•   High growth in shareholder money and reserves at Can Fin Homes is indicative of the company’s high profitability and sound financial standing. An investment in operational capacity is suggested by the rise in tangible assets. To maintain financial stability and long-term growth, the notable rise in short- and long-term borrowings necessitates cautious management. Although the decrease in long-term borrowings in 2024 is a good thing, it is important to consider how it will affect operational flexibility and liquidity.

•    An excessive dependence on short-term borrowing may put the business at risk for changes in interest rates and liquidity issues. It will be crucial to manage these liabilities while maintaining expansion. Financing affordable housing is one of the main objectives of this budget, and Canfin Home is among the top players in this market because of its superior underwriting practices and flawless asset quality. 

•    Over time, Can Fin Homes has exhibited remarkable growth in terms of both revenue and earnings. Can Fin Homes has announced an equity dividend of 300.00%, or Rs.6 per share, for the year ending in March 2024. The dividend yield at the current share price of Rs.845.25 is 0.71%.