PNB Housing Finance - Showcasing The Means To Healthy Growth, Profitability: Motilal Oswal

Motilal Oswal Report

Subtle changes like moving away from higher-ticket housing and loan against property loans to more granular ticket sizes, focusing more on non-metros, and expanding into tier-III and tier-IV cities for better growth and yields in affordable housing will help PNB Housing Finance Ltd. deliver healthy growth and improvement in profitability.

The management shared that it does not expect any significant increase in opex despite a higher proportion of affordable business (which inherently is opex intensive) because of shared resources across its prime, emerging and affordable segments.

Likewise, despite moving to higher-yielding and riskier segments like self-employed and informal segment customers, PNB Housing Finance remains confident of delivering credit costs of ~30 bp (excluding any recoveries from written-off pool).

While we delve deeper into the capabilities built by PNB Housing Finance in the later section of this report, the exhibition of these capabilities vindicates our thesis that PNB Housing Finance is a strengthening the franchise, wherein the risk-reward is favorable.

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