PNB Housing Finance Ltd. share price target

Strong recent growth rate (~60% CAGR FY14-FY16) that is bound to continue albeit at a more moderated pace, operating leverage advantage over medium term (24 to 94bps opex/avg. assets for our coverage universe vs. 133bps for PNB Housing, bound to decline), a healthy housing and non-housing mix (70:30), and a well-diversified borrowing profile with the cost advantage of a AAA rated company. The company also has a robust origination to disbursal model with the requisite risk management structures which gives the company confidence to grow at the extremely fast pace that it has been growing. This in our opinion broadly sums up PNB Housing's growth story over the next few years and it is definitely attractive....

PNB Housing Finance Ltd. is a subsidiary of Punjab National Bank (PNB), which holds 51% of share capital in the company. PNB Housing provides housing loans to individuals and corporate bodies for construction, purchase, repair and upgradation of houses. It also provides loan for commercial space, loan against property and loan for purchase of residential plots. The company is the fifth largest Housing Finance Company (HFC) in India by loan portfolio as of September 30, 2015 with the second largest amount of public deposits in an HFC in India as of March 31, 2015, according to the IMaCS Report. It conducts its...