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ICICI Securities Report
PNB Housing Finance Ltd. reported a beat on earnings (profit after tax Rs 2.57 billion versus our estimate Rs 0.7 billion) driven by better control over opex (down 26% YoY) and lower credit costs (down 54% YoY). Covid-19 provisions of Rs 0.7 billion in Q1 FY21 took the aggregate additional provisions to Rs 5.4 billion (approximately 65 basis points of asset under management). As on June 2020, Moratorium 2.0 declined to approximately 39% (retail: approximately 29%).
Other important considerations are (1) Headline asset quality (Gross Stage 3: 2.76%) was largely stable because of in-force moratoriums (approximately 85% of the corporate book); (2) Retail collections were muted in the months of April/May and picked up predominantly in the month of June; (3) Continue to await clarity (pending board meeting of promoter Punjab National Bank) on its participation in the rights issue.
Vulnerability of PNB Housing's balance sheet to new corporate (and continuing retail) slippages is still a cause of concern. PNB Housing is running a very tight ship in shorter asset and liability management (ALM) buckets leaving very little room for disappointment.
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