Buy PNB Housing; target of Rs 1230: Motilal Oswal

Motilal Oswal's research report on PNB Housing

PNB Housing Finance (PNBHF) delivered a resilient and well-rounded performance in FY25, effectively navigating regional headwinds (in states like Karnataka and Telangana/AP) and yield pressures stemming from repo rate cuts. Despite aggressive competition in the affordable housing segment, PNBHF achieved strong growth in its affordable segment and remains confident of sustaining this momentum. PNBHF has strategically evolved from being primarily a prime housing lender to one with an expanding footprint in the emerging and affordable housing segments. Both these segments accounted for ~26% of the total loan book as of Mar’25, up from ~21% a year earlier, and are projected to reach ~40% by Mar’27. We believe this deliberate shift in the portfolio mix will drive a structural uplift in blended yields and, over time, support a meaningful expansion in PNBHF’s NIM profile.

Outlook

We expect PNBHF to deliver a healthy ~19% CAGR in its total loan book and ~18% CAGR in PAT over FY25-27, along with RoA/RoE of 2.5%/13.3% in FY27. The stock currently trades at 1.3x FY27E and we reiterate BUY with a TP of INR1,230 (based on 1.5x Mar’27 P/BV).

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