PNB Housing Finance trades flat after rise over 48% surge in Q1 net profit

Shares of PNB Housing Finance pared gains after rising nearly 2 percent in early trade on July 25 on the back of solid Q1 numbers. At 11:17am, the stock traded flat at Rs 690 on the NSE.

The consolidated net profit of PNB Housing Finance surged 48 percent on-year in the April-June quarter, backed by strong loan growth and better asset quality. The non-banking financial company’s bottomline jumped 24 percent on a sequential basis to Rs 347 crore. Its loan assets increased 5 percent to Rs 60,395 crore over last year and retail loan assets grew 11 percent on-year to Rs 56,978 crore as on June 30, which is 94 percent of the loan assets.

On the other hand, corporate loans fell 45 percent from the last year to Rs 3,416 crore. The disbursements grew 7 percent on-year to Rs 3,686 crore in the June quarter. Gross non-performing asset ratio fell to 3.76 percent as on June 30 from 6.35 percent a year ago, while net non-performing asset ratio stood at 2.59 percent as on June 30. Its net interest income improved 70 percent YoY to Rs 629 crore.

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The company had completed a rights issue of Rs 2,493.8 crore in May with around 1.21 times subscription. It recorded participation from four shareholders, including PNB, Carlyle, Ares SSG, General Atlantic and various large domestic and foreign institutional investors. The proceeds from rights issue are being utilised to fund strategic growth plans and capitalise on the available growth opportunities.

Brokerage Views

Morgan Stanley is bullish on PNB Housing Finance and has given a ‘buy’ rating to the stock with a target price of Rs 825 per share. The brokerage house expects further re-rating of the stock as risk perception diminishes with regards to the asset quality.

Stock Performance

PNB Housing Finance stock has given a return of 51.33 percent over the last six months. Thus, considerably outperforming the benchmark Nifty50 index which has given a return of 9.42 percent over the same duration.

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