Bears pounded the shares of Can Fin Homes’ after the company’s MD and CEO Girish Kousgi, on September 19, 2022, informed the board about his decision to resign, citing personal reasons. The shares tanked over 5% to ₹ 545.00 apiece on Tuesday’s early trades.
Kousgi will continue to function as the Managing Director & CEO and discharge duties till the date of his relief as per a regulatory release filed by the company.
The veteran banker was appointed CEO in September 2019. He has nearly two decades of experience in financial services. Earlier, he was the head of retail credit at Tata Capital and before that with IDFC Bank and ICICI Bank.
Analysts at Jefferies said that Kousgi’s resignation is a setback as Can Fin Homes delivered a healthy balance of growth & good asset quality despite Covid during his tenure.
The brokerage said that uncertainty around upcoming management change would be an overhang near term, but core fundamentals stay healthy. Further, it is awaiting clarity around the new CEO and their growth strategy. It said that an external CEO from the industry may be viewed more favourably by investors.
Jefferies has a ‘Buy’ rating on the shares of Can Fin Homes with a target price of ₹ 730.00 apiece. This translates to an upside of 27.18% as compared to its current share price of ₹ 574.00.
The brokerage added that strong demand for mid-ticket housing loans in the salaried segment, and competitive funding costs could drive an 18% loan CAGR over FY22-25e. Further, it said that spreads may decline over FY22-25e due to a higher CP mix and a steeper rise in CP rates.
It believes that the asset quality should stay stable. This should support stable credit costs and expects the company to deliver strong EPS CAGR and 15+% ROE over FY22-25E. Moreover, the overhang related to audit should ease as limited irregularities were detected, Jefferies said.
Can Fin Homes has a AAA rating on its long-term bank facilities from Care Ratings. The company had reported that it was a victim of a ransomware attack on its website due to which it was not available for customers. However, there was no impact on its core IT solutions.
Written by Simran Bafna
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