Can Fin Homes shares: Axis Direct retains 'Buy' tag, raises target price to Rs 985

Axis Direct has reaffirmed its 'Buy' rating on Can Fin Homes Ltd while revising the target price upward to Rs 985 per share from the earlier Rs 925, citing improving growth prospects and stable asset quality. The brokerage values the stock at 1.9 times FY27E book value (BV), up from 1.8 times earlier.

According to Axis Direct, Can Fin's performance in its key states -- Karnataka (KA) and Telangana (TL) -- has remained subdued due to region-specific challenges, but signs of recovery are emerging. "Can Fin Homes' key states -- Karnataka (KA, owing to eKhata issue) and Telangana (TL) have reported muted growth. However, the company is seeing signs of revival, particularly in KA," Axis Direct noted.

The brokerage highlighted that the Karnataka government's recent measures regarding the eKhata issue are "directionally positive" and expected to support growth revival. The management anticipates monthly disbursements in Karnataka to improve from Rs 260 crore currently to Rs 300 crore in the fourth quarter of FY26. Meanwhile, Telangana's portfolio normalisation may take a couple of quarters, with the disbursement run-rate likely to increase from Rs 100 crore to Rs 120 crore by Q4.

Beyond these key markets, the company continues to witness robust growth in Eastern and Northern states, exceeding 30 per cent, while Tamil Nadu and Western states have been growing at about 25 per cent. Can Fin Homes sees the share of non-South states at 40 per cent by FY28.

While Axis Direct expects Q3 disbursements to be softer at around Rs 2,500 crore due to ongoing IT transformation, the brokerage said management remains confident of meeting its FY26 disbursement guidance of Rs 10,500 crore, translating to AUM growth of 12–13 per cent. Over FY27–FY28, AUM growth is projected to accelerate to 15 per cent.

On asset quality, the brokerage noted that delinquencies continued to decline in Q2, and credit costs are expected to remain contained. "The company expects delinquencies to trend downwards going into Q3 FY26. Can Fin to contain its FY26 credit costs at ~15 bps (+/-5 bps) or marginally lower, within its guided range," Axis Direct added.