Market

Here's why this Nifty Financial Services stock has risen 25% in a month

Updated : January 29, 2020 03:29 PM IST

The Nifty Financial Services index in the last one year has risen about 27 percent amid economic turmoil, demand slowdown, rising inflation, and all other concerns.

One midcap stock from this space that reported healthy gains is Can Fin Homes.

The stock last year rallied 41 percent, one of the highest among its peers.

Financial Services sector was one of the best-performing sectors in the past one year. The Nifty Financial Services index in the past one year has risen about 27 percent amid economic turmoil, demand slowdown, rising inflation, and all other concerns.

One midcap stock from this space that has constantly given healthy returns is Can Fin Homes.

The stock last year rallied 41 percent, one of the highest among its peers. Meanwhile, on a year-to-date basis, the stock has delivered returns of about 25 percent already on the back of strong Q3FY20 earnings. The company has reported even better returns in the past and has continued to do so.

In its October-December quarter this financial year, the stock posted net profit growth of 41 percent year-on-year (YoY) to Rs 106.61 crore as against Rs 75.81 crore in the corresponding quarter last year. Net Interest income (NII) surged 24 percent YoY to Rs 168.63 crore.

In terms of financial ratios, the stock’s capital adequacy ratio (CAR) stood at 22.07 percent in Q3FY20 compared to 19.39 percent in Q3FY19. During the same period, the company’s cost-to-income ratio also rose to 15.55 percent from 14.32 percent last year.

A day after the company posted its Q3FY20 earnings, the stock surged up to 19 percent intra-day on January 21, 2020.

However, despite being a consistent performer, India Ratings and Research had earlier downgraded the rating on CanFin Homes to AA from AAA in December since Canara Bank was scouting for partners to sell its stake in the venture and it could have an adverse impact on the company’s borrowing.

The ratings firm also mentioned that the company borrowed around 50 percent funds from the banks, received 13 percent funds from National Housing Bank, and 18 percent from non-convertible debentures, and 15 percent from commercial papers.