PNB Housing Finance Q2 Review: Inline; New CEO Appointment Expected Soon — Motilal Oswal Hikes Target Price

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Motilal Oswal Report

PNB Housing Finance Ltd. delivered an in-line performance in Q2 FY26, although earnings were a beat primarily due to the expected credit loss release of ~Rs 700 million from the foreclosure of a standard corporate account.

Disbursements were marginally soft, impacted by slower growth in the prime segment, while net interest margin moderated during the quarter owing to lower investment yields. Asset quality was stable, and sustained recoveries from the written-off pool resulted in write-backs for the sixth consecutive quarter.

PNB Housing Finance is focused on maintaining profitability through disciplined margin management, driven by a strategic shift toward higher-yielding affordable and emerging housing segments, coupled with a cautious resumption of corporate disbursements. Its commitment to controlled growth and prudent asset quality management positions it favorably for sustained execution.

The stock trades at 1.1x FY27E price/book-value.

We believe that the franchise has its inherent strengths, but the Board will need to instill greater investor confidence by appointing a suitable successor who closely aligns with the articulated strategy of the company.

Reiterate Buy with a target price of Rs 1,080 (based on 1.2x Sep’27E book value per share).

Key risks:

1. the inability to drive NIM expansion in FY27 amid aggressive competition in mortgages,

2. subsequent seasoning in the affordable/emerging loan book leading to asset quality deterioration and elevated credit costs, and

3. delay or challenges in appointing a suitable successor for the CEO position.

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