PNB Housing Finance Ltd. share price target

PNB Housing (PNBHF) delivered an all-round healthy performance wherein it exhibited 1) a healthy retail loan growth of ~17.5% YoY, 2) a minor expansion (~2bp) in NIM, 3) a continued improvement in asset quality

PNBHF is pivoting its product mix toward the emerging and affordable housing segments, with both these relatively higher-yielding segments now contributing ~23% to the loan mix (compared to ~18% as of Mar’23

PNB Housing Finance’s (PNBHF) strategy to build a scalable and sustainable retail mortgage business has been showing signs of success as reflected in 10% YoY growth in retail business during Q4FY24 - highest in past 5 years.

PNBHF’s 4QFY24 PAT grew ~57% YoY to ~INR4.4b (~20% beat), driven by
NIM expansion of ~15bp QoQ. This NIM expansion, despite a sequential
moderation in yields, was aided by 1) the absence of any one-offs unlike the
previous quarter, and 2) stable CoB.

PNB Housing Finance (PNBHF) plans to transform from a prime housing financier into a lender that offers a wide bouquet of mortgage products across cohorts of
product and customer profiles. In addition to its existing affordable housing loans (Roshni) vertical, it will also enter the emerging market vertical from FY25.

PNB Housing Finance’s (PNBHF) Q2FY24 financial performance was an outcome of the successful execution of its renewed ‘retailisation’ strategy. This was reflected in 99% of total disbursements towards retail segment (INR 42bn, of which INR 3.7bn were towards affordable housing) and a sharp decline in corporate book GNPL to 2.9% by Sep’23 from 25% in Jun’23.

PNB Housing Finance’s (PNBHF) Q1FY24 financial performance was an outcome of the new management’s renewed focus on ‘retailisation’ as reflected in 99% of total disbursements towards retail segment (INR 37bn, of which INR 2.2bn was towards affordable housing) and steady decline in corporate book to INR 34bn (down 10% QoQ).

All set for retail focused growth

PNB HFL has a well-diversified funding profile comprising funding from banks, NHB, non-convertible debentures (NCDs) & bonds, deposits and external commercial borrowings (ECBs). The recent successful completion of the rights issue in May 2023 of Rs. 2,493.76 crores, with around 1.21 times subscription, will help the company to reduce its managed gearing further and support future growth while maintaining prudent capitalisation.

PNB Housing Finance’s (PNBHF) Q4FY23 financial performance was an outcome of the new management’s renewed focus on ‘retailisation’ as reflected in the all-time high retail disbursements (up 33% QoQ) and steady decline in the corporate book to Rs38bn (down 23% QoQ).

PNB Housing Finance’s (PNBHF) Q3FY23 earnings beat was primarily led by higher assignment income and better incremental spreads, partially offset by higher than expected credit cost and opex.

PNB Housing Finance’s (PNBHF) Q2FY23 earnings beat was primarily led by higher
assignment income and better incremental spreads, partially offset by higher than
expected credit cost and opex.