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Motilal Oswal Report
PNB Housing Finance Ltd. reported Q1 FY21 profit after tax of Rs 2.6 billion (versus estimate of Rs 600 million). The beat was driven by stronger pre provision operating profit and significantly lower credit cost. Moratorium rate on the loan book declined to 39% in Phase 2 from 56% in Phase 1. Asset under management remained sequentially stable at Rs 835 billion.
Liquidity on the balance sheet stood at Rs 71 billion, i.e., 11% of borrowings. The share of capital market borrowings, non-convertible debentures and commercial papers (NCDs + CPs) declined to 22% from 32%. The company raised Rs 22.5 billion from National Housing Bank, the share of which now stands at 10% of total borrowings. Opex declined approximately 25% both QoQ and YoY. Management guided to 5–10% YoY reduction in FY21.
Over the past year, the key challenge for the company has been its high leverage. This has resulted in the running down of the balance sheet. In the current environment, this makes PNB Housing Finance even more vulnerable to asset quality shocks.
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