Can Fin Homes has reported robust financial performance for Q3FY26, with profit after tax registering a strong 25% year-on-year growth to ₹2.60 billion, which was in line with analyst expectations. The housing finance company demonstrated solid operational momentum across key financial metrics during the quarter.

Financial Performance Highlights

The company's core earnings showed healthy expansion with net interest income growing 22% YoY to ₹4.20 billion, meeting market estimates. Fee and other income witnessed significant improvement, rising to ₹97.00 million compared to ₹58.00 million in the previous year, reflecting enhanced business activity and diversified revenue streams.

Cost Management and Operational Metrics

Operating expenses increased 35% year-on-year to ₹799.00 million, which was aligned with analyst projections. The cost-income ratio stood at 18.50% for the quarter, showing a marginal improvement from the previous quarter's 18.60% but higher than the previous year's 16.90%. The company made additional provisions of ₹4.70 million for gratuity following new labor law requirements.

Analyst Outlook and Valuation

Motilal Oswal has reiterated its neutral rating on Can Fin Homes with a target price of ₹1,015, based on 1.8x December 2027 estimated price-to-book value. The brokerage projects a compound annual growth rate of 14% for advances and 10% for profit after tax over the FY26-28 period.

The stock currently trades at 1.8x FY27 estimated price-to-book ratio. The analyst expects the company to maintain steady growth trajectory with return on assets of approximately 2.20% and return on equity of around 17% by FY28, indicating sustainable profitability and efficient capital utilization in the housing finance segment.

Prabhudas Lilladher has maintained its accumulate rating on Can Fin Homes with a target price of ₹1,015.00, citing improved operational performance and positive regional momentum despite some operational challenges.

Quarterly Performance and Growth Outlook

The housing finance company demonstrated improved disbursement activity during Q3, with particularly strong performance in Karnataka and Telangana markets showing positive run-rates. The loan book registered growth of 10.00% year-on-year in Q3, forming the foundation for the brokerage's growth projections.

Margin and Cost Structure Analysis

Net interest margins are expected to trend in line with management guidance at 3.75% for both FY26 and FY27, supported by anticipated lower cost of borrowing. This margin stability represents a key positive factor in the brokerage's revised estimates.

However, the cost-to-income ratio is projected to remain elevated at approximately 18.00% over the FY26-28 period. This elevation stems from ongoing investments in business transformation initiatives and expansion activities, which are expected to weigh on near-term profitability metrics.

Valuation and Investment Rationale

Prabhudas Lilladher has revised its FY26 and FY27 estimates upwards, incorporating the positive margin trajectory observed in recent performance. The target price of ₹1,015.00 is derived using a valuation multiple of 2.0x December 2027 estimated price-to-adjusted book value.

The brokerage acknowledges that while the company shows promise with improved disbursements and stable margin guidance, lower growth expectations and elevated operational expenses continue to impact overall earnings potential. Despite these challenges, the accumulate rating reflects confidence in the company's long-term prospects and regional market positioning.