PNB Housing Finance Ltd. share price target

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.

NII fell 19% YoY and 11% QoQ to INR4.15b (20% below expectation). Provisions at INR1.3b were below our estimate of INR2.4b. Disbursements declined ~5% QoQ to INR28.3b. Accordingly, AUM decreased 5% QoQ and 14% YoY to ~INR665b. GNPA and NNPA rose ~170bp and 155bp QoQ to 7.6% and 4.9% (as a percentage of loans), respectively, with Stage 3 PCR declining 760bp to 36%. ECL/EAD also declined ~40bp sequentially to 4.4%. A corporate exposure of ~INR4b (already identified as SICR) slipped into NPA in 3QFY22, while the...

PNBHF reported a 2QFY22 PAT of INR2.3b (9% miss), which declined by 25% YoY and 3% QoQ. The miss was driven by lower-than-estimated NII on account of income reversals due to accelerated run-off in the securitized pool of loans and partly mitigated by lower credit costs. NII fell 25% YoY and 9% QoQ to INR4.7b (9% below our estimate of INR5.1b). Provisions at INR1.4b were below our estimate of INR1.8b....

PNB Housing Finance’s (PNBHF) Board has decided not to proceed with the proposed preferential issue of Rs40bn @Rs390 per share to Carlyle group, General Atlantic, SSG Group and other investors. Preferential issue has been held up for more than 4 months (after already taking over 2 years), due to the pending legal proceeding before SAT. Also, in an exchange filing, the company highlighted that there is lack of visibility or certainty as to the timeline for judicial determination of the legal issues and regulatory approvals were not expected to be forthcoming amidst litigation. With proposed deal being off the table, the overhang resurfaces.

PNBHF reported a PAT of INR2.4b in 1QFY22 (v/s INR2.6b YoY). The 45% beat was driven by lower-than-estimated credit costs (~0.9% annualized) and opex (47%/9% below our estimate). Asset quality deteriorated with Gross Stage 3 increasing by 155bp QoQ to 6%. Few corporate accounts in Stage 2 and under the SICR pool slipped into NPAs. Total restructured pool (under both OTR 1.0 and 2.0) stood at INR17.33b (~2.9% of loan assets). PNBHF is working on different initiatives to optimize costs, leverage digital...