Morgan Stanley has retained its ‘Overweight’ rating on Can Fin Homes, but has revised the target price downward to ₹885 from ₹1,030. The new target reflects a potential upside of 25% from the current market price (CMP) of ₹708.00. The revision comes amid concerns over loan growth pressures and revised assumptions for long-term growth and return on equity (ROE).
Key Highlights:
- Loan Growth Pressures:
- Persistent challenges in loan growth have led Morgan Stanley to lower its assumptions for the company’s long-term loan growth and ROE.
- ROE Outlook:
- Despite the revisions, ROE remains above 15%, which Morgan Stanley views as attractive for a relatively defensive housing finance business.
- Valuation:
- The brokerage notes that current valuations provide room for upside, though the realization of this upside may be delayed due to growth constraints.
- Revised Target Price:
- The target price has been cut to ₹885, reflecting adjustments for Can Fin Homes’ slower loan growth trajectory and valuation reassessment.
Morgan Stanley’s Perspective:
Morgan Stanley maintains its positive view on Can Fin Homes, supported by its defensive business model and attractive ROE. However, growth challenges necessitate a more cautious outlook, with the upside likely materializing over a longer horizon.
CMP and Target:
- Current Market Price (CMP): ₹708.00
- Target Price (TP): ₹885
- Upside Potential: 25%
Conclusion:
While loan growth pressures persist, Can Fin Homes’ defensive positioning and steady ROE make it an attractive long-term play. Morgan Stanley remains optimistic but tempers its expectations, citing delays in achieving the full upside.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consult their financial advisors before making investment decisions.