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CANFIN HOMES 2022-23 Annual Report Analysis

Tue, 27 Jun

CANFIN HOMES has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during the year 2022-23.

CANFIN HOMES Income Statement Analysis

• Interest income during the year rose 37.9% on a year-on-year (YoY) basis.
• Interest expenses were up by 47.4% YoY during the same period.
• Operating expenses increased by 8.5% YoY during the year.
• The company's net interest income (NII) increased by 24.9% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 3.2% in FY23 as against 3.0% in FY22.
• Other income increased by 68.0% YoY during the year.
• Net profit for the year increased by 31.9% YoY.
• Net profit margins during the year declined to 22.7% in FY23 from 23.7% in FY22.

CANFIN HOMES Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	19,878	27,420	37.9%
Other Income	Rs m	7	11	68.0%
Interest Expense	Rs m	11,545	17,015	47.4%
Net Interest Income	Rs m	8,333	10,405	24.9%
Operating Expense	Rs m	1,891	2,051	8.5%
Pre-provision Operating Profit	Rs m	6,449	8,365	29.7%
Provisions & Contingencies	Rs m	2,438	3,816	56.5%
Profit before tax	Rs m	6,351	8,240	29.8%
Tax	Rs m	1,640	2,028	23.7%
Profit after tax	Rs m	4,711	6,212	31.9%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	3.0	3.2
Net profit margin	%	23.7	22.7

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CANFIN HOMES Balance Sheet Analysis

• The company's deposits during FY23 stood at Rs 4.4 bn as compared to Rs 4.9 bn in FY22, thereby witnessing a decrease of 11.0%.
• Advances for the year stood at Rs 311.9 bn as compared to Rs 263.8 bn during FY22, a rise of 18.3%.
• Cost of deposits for CANFIN HOMES rose 12.7% and stood at 7.4%, while yield on advances rose to 0.0%.
• The lender's investments rose to Rs 14.6 bn during the year from Rs 11.5 bn in FY22.
• Borrowing stood at Rs 65.2 bn, a fall of 3.3% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 330.2 bn as against Rs 279.0 bn during FY22, thereby witnessing a rise of 18.4%.

CANFIN HOMES Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	30,666	36,473	18.9%
Advances	Rs m	263,781	311,933	18.3%
Deposits	Rs m	4,885	4,350	-11.0%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	6.6	7.4
Investments	Rs m	11,520	14,623	26.9%
Borrowings	Rs m	67,445	65,225	-3.3%
Total Assets	Rs m	278,966	330,221	18.4%

Current Valuations for CANFIN HOMES

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 46.7, an improvement from the EPS of Rs 35.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 727.6, stands at 11.7 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 2.7 times, while the price to income ratio stands at 2.7 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	149.3	205.9
Earnings per share (Unadj.)	Rs	35.4	46.7
Diluted earnings per share	Rs	35.4	46.7
Avg P/E ratio	Rs	17.1	11.7
Avg P/ABV ratio	Rs	1.9	2.7
Avg Market Cap	Rs	80,641	72,769
Dividends per share (Unadj.)	Rs	3.00	3.50

Ratio Analysis for CANFIN HOMES

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio improved and stood at 7,170.8x during FY23, from 5,399.4x during FY22. The credit/deposit ratio tells us how much money a company has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The company's debt to equity ratio decreased and stood at 1.91x during FY23, from 2.36x during FY22. The debt to equity ratio of a company tells us how much debt a company uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): CANFIN HOMES's capital adequacy ratio (CAR) was at 0.0% as on 31 March 2023 as compared to 23.2% a year ago. This ratio helps measure the financial strength of the company or any finance company to meet their obligations using their assets and capital.

  A company that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the company's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a company sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the company is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that companies hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the company improved and stood at 17.0% during FY23, from 15.4% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the company improved and stood at 1.88% during FY23, from 1.69% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 8.36% during FY23, from 7.21% during FY22. The ROCE measures the ability of a company to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a company's gross NPAs to gross advances. CANFIN HOMES's gross NPA ratio stood at 0.0% as of 31 March 2023 compared to 0.6% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a company's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the company has made provisions.

  The net NPA ratio of CANFIN HOMES was 0.0% in financial year 2023. This compared with 0.3% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	5,399.4	7,170.8
Debt to Equity Ratio	x	2.4	1.9
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	23.2	0.0
Return on Equity	%	15.4	17.0
Return on Assets	%	1.7	1.9
Return on Capital Employed	%	7.2	8.4
% of Gross NPAs	%	0.6	0.0
% of Net NPAs	%	0.3	0.0
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

To see how CANFIN HOMES has performed over the last 5 years, please visit here.

CANFIN HOMES Share Price Performance

Over the last one year, CANFIN HOMES share price has moved up from Rs 442.3 to Rs 727.6, registering a gain of Rs 285.3 or around 64.5%.

Overall, the S&P BSE SENSEX is up 20.8% over the year.

(To know more, you can check out historical annual results for CANFIN HOMES here and quarterly results for CANFIN HOMES here)