Neutral PNB Housing Finance; target of Rs 600: Motilal Oswal

Motilal Oswal's research report on PNB Housing Finance

PNB Housing Finance (PNBHF) reported a healthy 3QFY23 with PAT growth of 43% YoY to ~INR2.7b (24% beat). This was driven by ~55bp QoQ expansion in margin and lower CIR of ~16%. The 9MFY23 PAT rose 15% YoY to ~INR7.7b. NII jumped 73% YoY to INR7.2b aided by slower increase in CoF, quicker transmission of interest rates to customers and net positive impact of ~INR790m from the assigned loan pool. PPOP surged 76% YoY to INR6.74b. Asset quality improvement was driven by decline in both retail and Corporate GNPA. Total GNPA/NNPA stood at ~4.9%/3.2% (% of Loan Assets) and declined 120bp/50bp QoQ, respectively. Retail GNPA improved ~50bp sequentially to 2.9%. Corporate GNPA improved to 27% (v/s 30% QoQ) aided by write-off of a large NPA account.

Outlook

We expect PNBHF to deliver a loan book and PAT CAGR of 12% and 20% over FY23-FY25 and ~1.9%/12% RoA/RoE in FY25, respectively. However, we would closely track the execution on loan growth, sustenance of NIM and asset quality before turning constructive on the stock. Maintain Neutral with a TP of INR600 (premised on 0.8x Sep’24E BVPS).