PNB Housing outshines peers on strong loan growth
Despite the recent price gain, the stock’s valuation at a trailing price-book (P/B) multiple of 1.6 remains below the two-to-three range for peers. It reflects lower return ratios due to the asset mix tilting more towards prime housing, which has lower yields compared with affordable housing segment. For PNB Housing, return on equity ranges between 11% and 13%. Some of the peers with higher P/B multiples including Aadhar Housing Finance, Aptus Value Housing Finance India and Home First Finance Company India have RoEs of 15-20%. These lenders predominantly focus on low-cost housing.
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To address the valuation gap, PNB Housing has chalked out plans to increase share of the affordable and emerging housing segment in retail loan portfolio to 45% by the end of FY27 and to 50% in the next two years from over 40% at present. It also launched financing for developers and micro housing during the June quarter to improve the yield, which remained at around 9.5%, similar to the previous quarter.
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The lender changed the disbursement recognition method in the June quarter to cheque realisation from cheque handover basis. This resulted in a sharp sequential fall of 37% in disbursements at ₹5,882 crore though it increased by 18% year-on-year. Assets under management (AUM) and total loan book rose by 13% and 15% to ₹93,021 crore and ₹89,670 crore respectively. The gross nonperforming assets (GNPA) ratio remained under 1%, reflecting stable asset quality.
“The re-entry into developer finance, increasing mix of affordable and emerging segments and expansion into micro housing should support yields, while strong disbursement momentum and sustained recoveries underpin growth and profitability,” mentioned JM Financial Institutional Securities in a review report.
