Motilal Oswal Maintains 'Buy' On PNB Housing Finance, Cites Improved Product Mix, Execution; Sees 38% Upside

Motilal Oswal Report

We reiterate Buy with a target price of Rs 1,160 (based on 1.5 times Sep’26 price/book value).

PNB Housing Finance is a strengthening franchise where the risk-reward profile is favorable for a long-term investor to witness this transformation over the next three years. It is well-equipped to successfully navigate the near-term headwinds in its net interest margin profile, and further offset them with the product mix improvement.

We expect PNB Housing Finance to deliver a healthy ~18% CAGR in the loan book and ~23% CAGR in PAT over FY24-27, with an RoA/RoE of 2.6%/14% by FY27.

The company trades at 1.2 times FY26E price/book value and the risk-reward is favorable for a further re-rating in the valuation multiple as investors gain more confidence in its sustained execution in retail (both emerging and affordable segments).

On the technical front, we expect the supply overhang from private equity investors to be fully resolved within the next three months, which could lead to another leg of rerating in valuation multiples.

Key risks:

• slowdown in the economy leading to lower demand for housing and moderation in loan growth and

• subsequent seasoning in the affordable loan book leading to asset quality deterioration.

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