Canfin Homes stock may give 20% returns in six months

Housing is a significant engine of growth and development for the economy and the Indian residential real estate market constitutes a major portion of the property market by sales volumes. There was a slowdown in the property market during the last seven years, but post the Covid pandemic, the Indian real estate sector has again witnessed high growth on the back of rise in demand for residential homes.
Analysts tracking the industry expect housing finance companies to record a growth of over 10% during FY-2023 with private equity investments in real estate estimated to grow to US$100 billion by 2026 with Tier1 and Tier 2 cities being the prime beneficiaries. Covid-19 had impacted the housing finance companies disbursement and collection efficiency with growth taking a big knock. However, the collection efficiency started bouncing back by the middle of 2021 and improved further in the second and third quarters of the FY22. With healthy demand in the industry and growing economic activity, the housing finance market is expected to result in a steady growth of disbursements and improvement. The overall portfolio book of housing finance companies is estimated to be around Rs 11 lakh crore as of July 2022 with exposures across home loans, loan against property, construction finance and lease rental discounting segments. With rapid urbanisation, improved affordability coupled with supportive government initiatives and discounts from real estate companies, analysts and fund managers tracking the sector expect housing finance companies to grow exponentially going ahead, particularly the affordable housing segment. Since around 66% of the country’s population is below 35 years of age and around 30% of the population resides in cities, housing finance companies stand to benefit immensely from the housing sector’s growth. Plus they are well equipped with competitive product offerings and product pricing, superior customer service and last mile connectivity with potential customers where large banks are unable to service. The last two years have been a blessing in disguise for the real estate sector as there is huge demand potential through shift in preferences by end consumers to own a home across the country. Canfin Homes promoted by Canara Bank is a top notch housing finance company and listed on both the BSE and NSE stock exchanges. The company posted decent second quarterly financial numbers for 2023 with Net Sales at Rs 657.48 crore during September 2022 up 40.55% from Rs 467.77 crore as of September 2021. The Net Profit stood at Rs 141.71 crore during September 2022 up 14.62% from Rs 123.64 crore in September 2021 while the EBITDA stood at Rs 607.24 crore in September 2022 up 37.27% from Rs 442.38 crore for September 2021.Fund managers and large brokerage houses are quite bullish on the Canfin Homes stock currently priced at Rs 516 to appreciate by 20% in the next six months’ time frame.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.