PNB Housing Q3 Results Review - Disbursements Weak; NIM Compression Leads To Earnings Miss: Motilal Oswal

Motilal Oswal Report

PNB Housing Finance Ltd.’s Q3 FY24 profit after tax grew 26% YoY but declined 12% QoQ to ~Rs 3.4 billion (~15% miss) due to net interest margin (excluding one-offs) compression of ~20 basis points QoQ.

Management attributed this to a combination of factors such as:

1. Corporate book decline,

2. Loan book retention to stem balance transfer-outs, and

3. Competitive dynamics resulting in lending at lower rates in select pockets.

Net interest income (excluding one-offs) declined ~1% YoY and 3% QoQ to ~Rs 6.2 billion due to a gradual shift in the mix towards retail.

However, reported NII declined ~19% YoY and ~10% QoQ to Rs 5.95 billion (11% miss). Reported pre-provision operating profit declined 26% YoY to Rs 5 billion (14% miss).

PNB Housing’s Q3 FY24 disbursements grew 21% YoY but declined ~1% QoQ to ~Rs 41.3 billion. Total loan book grew ~7% YoY/ 2.4% QoQ to ~Rs 623 billion. However, retail loans grew 13% YoY. We estimate a retail loan growth of ~14% in FY24.

Reiterate 'Buy' with an unchanged target price of Rs 1,025 (based on 1.4 times FY26E book value per share).

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