Hold PNB Housing Finance: target of Rs 970: ICICI Securities

ICICI Securities's research report on PNB Housing Finance

After successfully strengthening its retail asset franchise during FY24–25, PNB Housing Finance (PNB HF) has shifted its focus towards enhancing profitability going ahead, and its highest quarterly (since FY21) RoE at >13% during Q2FY26 is a reflection of sustained improvement across financial parameters despite management transition. With more than two years into new businesses like emerging and affordable housing segments, PNB HF is incrementally focusing on profit maximisation led by spread expansion and operational efficiency. Early signs of this are already visible in 3bps QoQ spread expansion to 2.26% despite prime housing contributing >60% of total AUM. Affordable HL + emerging loans now constitute ~50% of its total retail disbursements.

Outlook

We downgrade PNB HF to HOLD (Add earlier) with a revised TP of 970 (INR 1,200 earlier), valuing the stock at 1.25x (vs. 1.6x earlier) PBV Sep’26E.