Accumulate PNB Housing; target of Rs 835: Arihant Capital

Arihant Capital's research report on PNB Housing

PNB Housing Finance (PNBHFL) came out with good set of numbers, ahead of our estimates. Profit for the quarter grew by 51% YoY to Rs 380 cr, driven by lower provisions and better than expected margins. NII for the quarter grew by 13% YoY to Rs 610 cr, led by strong advances growth of 30% YoY. NIM fell by 12 bps QoQ to 3.18% due to decline in yields. Disbursements during Q4FY19 declined by 8% QoQ/2% YoY to Rs 8562 cr. PNB housing finance maintained excess liquidity of Rs 7000 cr in form of cash and liquid investments as on 31st Mar 2019. At the same time, PNBHFL did not face any issues in raising fund from a variety of sources. The company maintained spreads in the range of 2.6% and reported strong loan growth. Asset quality was quite healthy and best in class, with GNPA of 0.48% (stable QoQ) while NNPA at 0.38%.

Outlook

Due to strong performance and attractive valuation we maintain our ‘Accumulate’ rating with a revised target price of Rs 835.