'Buy' PNB Housing Finance Shares Maintains Nirmal Bang Post Inline Q1 Results

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Nirmal Bang Report

PNB Housing Finance Ltd.’s Q1 FY26 results were in line with our expectations at the net interers income level. However, at the pre-provision operating profit/PAT level, the results were below our estimates by 6.9%/3.9%. PAT grew 21.2% YoY to Rs 5.3 billion due to healthy loan growth and negative credit costs.

Q1 FY26 disbursements slowed down to 13% YoY as against 23% YoY in Q4 FY25; we built in a loan growth of ~16% in FY26E, driven by the Affordable/EM segments.

Expect NIM to sustain at ~3.6% in FY26E supported by growth in high-yield segments. Opex-to-AUM is expected to be at 1%.

Asset quality stood stable in 1QFY26 and we expect strong recoveries and benign credit costs to continue.

We have projected the loan book and earnings to clock a CAGR of 15.8%/15.5% over FY25-FY27E, which will result in a RoA/RoE of 2.5%/12.8% in FY27E.

We reiterate our Buy rating with a target price of Rs 1,300 (same as earlier) valued at 1.6x Jun-27E ABV (same as earlier).

The target price multiple premium of 60% over five-year average P/ABV of 1x is justified given the shift toward Affordable Housing/EM and strong execution on asset quality.

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