Wednesday, 7 February 2018

HDFC could move to acquire controlling stake in CanFin Homes | Trade Nivesh Investment

HDFC is exploring the purchase of controlling stake in CanFin Homes (30% stake of parent Canara Bank) as per Media reports. HDFC which is raising Rs13,000cr, may use part of this money to fund this stake buying.

If the acquisition goes through then it will be positive for CanFin Homes as it would be part of HDFC group.

Shares of Can Fin Homes share is trading higher at Rs473/share (up 3.3%) and Canara Bank share is trading higher at Rs327/share (up 2.57%).

The divestment would act positive for the Canara bank as it would aid it to improve its capital adequacy ratio, which in turn would partly fund its future loan growth.
Canara Bank’s improving asset quality, better NIM prospects and rising noninterest income bodes well for its profitability over FY17-19E. The bank is trading at ~2.1x FY19E P/ABV. We have positive outlook on the stock.
Can Fin Homes Ltd is a South-based (74% of business) housing finance company with Canara Bank holding 30% stake. We expect strong growth in affordable housing loan segment and high yielding non-core segments. Additionally, favorable funding mix and the lower cost-to-income ratio will trigger earnings growth. The stock is trading at 3.7x FY19E P/BV. We have positive outlook on the stock.

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