PNB Housing Finance gains after Motilal Oswal rates it as a top pick

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26 Aug, 2025 12:21

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PNB Housing Finance shares were up 1.96 percent at Rs 812.8 at 11.49am in January 16 after Motilal Oswal declared the company as its top pick in the NBFC and housing finance ambit. The brokerage firm has given the stock a 'buy' rating with a target price of Rs 1,025 per share.

The brokerage firm said that over the past two years the company has transformed its business model into retail prime segment and retail affordable segment and has reduced its corporate loan book to around 4 percent of the AUM mix. In April 2023, PNB Housing Finance completed its rights issue of around Rs 25 billion which brought in confidence capital and strengthened its case for a credit rating upgrade from rating agencies, said Motilal Oswal.

The brokerage firm expects net interest margins to expand by around 20 basis points over the next two years to 4.4 percent in FY26 because of declining borrowing costs and a slight expansion in yields.

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Motilal Oswal said that PNB Housing Finance has moved from a consolidation mode to a growth mode. It expects the company to deliver a CAGR of 18 percent in AUM and around 25 percent in net profit over FY24-26.

Adding branches 

For around 18 months, the number of branches for PNB Housing were stagnant at 100, after which it scaled up to 200 branches by the end of September 2023. PNB Housing expects it to increase to 300 by March 2024.

Also read: RBI's stricter HFCs norms to have minimal impact on PNB Hsg, LIC Hsg, Can Fin Homes, say analysts

“We believe that branch additions and improvements in productivity of new branches will drive healthy growth in retail loans. We expect a CAGR of around 17 percent in retail loans over FY24-26,” said Motilal Oswal.

It believes that the risk-reward is favourable for a further re-rating in the valuation multiple as investors gain more confidence in the company’s sustained execution in retail prime segment and retail affordable segment.

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