PNB Housing shares rise 8% post Q1 results; Morgan Stanley, UBS retain target prices

PNB Housing Finance Ltd shares rose sharply in Wednesday's trade after several brokerages backed the stock following the company's June quarter results. Morgan Stanley maintained its target price at Rs 1,405, while UBS reiterated Rs 1,220. Investec retained its target at Rs 1,200 and Axis Capital maintained Rs 1,150, as per Bloomberg data compiled by Business Today.

The PNB Housing stock climbed 8.38 per cent to a high of Rs 1,138 apiece on the BSE. The scrip has 13 'Buy' ratings and two 'Hold' ratings, with a consensus target price of Rs 1,267.50, implying an 11.4 per cent potential upside.

MOFSL said PNB Housing's Q1 disbursements remained strong, excluding the impact of the change in recognition methodology, although reported loan growth was affected by the same. Asset quality remained stable, resulting in benign credit costs, it said.

While yields and spreads remained stable, NIMs contracted 19 basis points QoQ during the quarter. "PNBHF currently trades at 1.3x FY27E P/BV. Management’s commentary on the margin outlook and loan disbursement trajectory will be critical in assessing the earnings sustainability, and we will revisit our estimates and target following the upcoming earnings call on August 5," MOFSL said.

PNB Housing's Managing Director and CEO, Ajai Shukla, said the housing finance company started FY27 on a steady note, with assets under management growing 13 per cent year-on-year to Rs 93,021 crore and the retail loan book rising 16 per cent year-on-year. He said the Affordable and Emerging Markets segments remained key growth drivers, registering 27 per cent growth and contributing 41 per cent to the retail loan book.

Shukla said asset quality remained strong, with gross non-performing assets at 0.95 per cent, while healthy recoveries from the written-off pool supported profitability. PNB Housing said it remained focused on strengthening its distribution network and digital capabilities.

"Our ongoing digital transformation initiatives across sourcing, underwriting, servicing and collections are helping enhance customer experience, improve operational efficiency and support scalable growth. Backed by a strong capital position and prudent risk management practices, we remain well positioned to drive sustainable growth and create long-term value for our stakeholders," Shukla said.

For the quarter, PNB Housing's net profit grew 4 per cent year-on-year (YoY) to Rs 557 crore, while net interest income rose 6 per cent to Rs 803 crore. Net interest margin moderated by 19 basis points quarter-on-quarter due to an increase in leverage in Q1 FY27 and the true-up of Q4 FY26 reported NIM. Return on assets for Q1 FY27 stood at 2.37 per cent and return on equity at 11.44 per cent, while the capital risk adequacy ratio remained at 28.26 per cent as on June 30.

The housing finance company said it recovered Rs 67 crore in Q1 FY27 from the total written-off pool, resulting in a credit cost of minus 12 basis points. It also said the cost of borrowing for Q1 FY27 increased slightly to 7.36 per cent despite tight liquidity on account of macro-economic conditions. The quarterly numbers and management commentary were followed by a rise in the stock and steady target prices from brokerages including Morgan Stanley, UBS, Investec and Axis Capital.