CanFin Homes-BUY; Play For The Bonus Component in Rights Can Fin Homes (BSE: 511196 | NSE: CANFINHOME) (May not be useful for Day-Traders) CanFin Homes-A Housing Finance NBFC promoted by Canara Bank is coming out with a Rs 250-300 crore rights issue. The Board meeting to finalise the terms will be held on January 12, 2015. We expect a ratio of 1:2 and rights to be priced in the Rs 250-300 per share range, as against the current market price of Rs 600 per share. The corporate lends essentially in Southern states, with loan ticket size of Rs 10-15 lakh. Post the Rs 250 crore fund raising, CanFin will be able to leverage the equity funds six times through debt, and will have additional disbursable sums of Rs 2000 crore. Consequently loan book by end FY15 will rise to Rs 8400 crore and to roughly Rs 10,000 crore by end FY16. EPS which is Rs 36 for FY 14 and possibly for FY15 will rise to Rs 60 by FY16-17 March. The stock is thus trading at a PE of 10, based on two year forward earnings of Rs 60 per share. At the current market cap of Rs 1000 crore, CanFin is the smallest housing finance NBFC. The business model is scalable. The three main shareholders of CanFin-Canara Bank, Chattisgarh Investments and NRN Murthys Catamaran investments have already agreed to subscribe to their rights entitlement in full. The issue will thus sail through. Investors could play for the Bonus element in the rights issue, BUY the stock and BUY the rights. (Disclosure: Myself, My Relatives & My Friends have no positions in this stock. My clients may have long positions.) (Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice.)
Posted on: Fri, 09 Jan 2015 05:19:10 +0000
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