Suresh Iyer To Lead Can Fin Homes. What Is Jefferies’ View?

Can Fin Homes Ltd. said its board appointed Suresh Srinivasan Iyer as the managing director and chief executive officer of the company.

The appointment, which is effective from 18 March, is initially for a fixed term of three years, the Indian mortgage lender said in a stock exchange announcement. The tenure is further extendable by two years, it added.

Can Fin Homes said Iyer has a work experience of over 25 years in Gruh Finance and worked across multiple positions and different functions, including sales, operations, IT strategy, policy and pricing.

The development comes after the resignation of Girish Kousgi from the position of MD & CEO at Can Fin Homes in September 2022.

Jefferies’ View

Jefferies said the news is not a big surprise given media speculation around Iyer’s appointment in recent months, but this is a positive given his long experience in the mortgage industry, including as core management at Gruh Finance.

The brokerage maintained Buy call on Can Fin Homes with a base case target price of 635 rupees per share.

According to Jefferies, key things to watch out for are:

• New CEO’s strategy to drive growth and manage margins would be the key, as Can Fin Homes has reported stable asset quality over the years across managements, but its growth has varied.

• It would be interesting to see if Iyer plans any changes in target customer segment and geographies.

• Can Fin Homes has seen rise in attrition at branches and mid management levels in the last six months, while disbursement growth at the company has also moderated in the fiscal third quarter of FY23 (down 1.1% year-on-year).

• In near term, Iyer would have to manage attrition, hire to plug in the gaps, and energize the team to drive growth.

Growth Expectations

• Jefferies says margins at Can Fin Homes can surprise positively after rates stabilize due to lag between repricing of loans and liabilities.

• Some moderation in loan growth likely, but it should still be healthy.

• Can Fin Homes is likely to deliver a 16% EPS CAGR and an 18% return on equity over FY23-FY25.

Jefferies has a target price of 699 rupees on the stock, considering its upside scenario assumptions.

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