PNB Housing Finance Ltd Q3 FY22 Earnings Conference Call Insights

Key highlights from PNB Housing Finance Ltd (PNBHOUSING) Q3 FY22 Earnings Concall

Management Update:

• The company said that Phase 2 of Project IGNITE, which is the design and implementation stage has started and is within timeline.

Q&A Highlights:

• Rikin Shah from Credit Suisse asked about retail disbursements falling 4% QoQ. Kapish Jain CFO said that the fresh retail disbursal for Q3 was INR7,217 crore, registering a growth of 18% YoY. The company added that due to the lower rates offered by the PSUs and some of the larger players, PNBHOUSING did have an impact in its business. The disbursement in 4Q22 is expected to be the same as 4Q21.

• Rikin Shah from Credit Suisse also asked about the provision coverage and its outlook. Pankaj Jain COO commented that looking at the number of Stage 3 coverage, it looks to be 43% in September and now it is around 36% in December. On the outlook, company will continue to maintain an adequate provision policy.

• Rikin Shah from Credit Suisse asked another question about NPA and whether there is any soft requirement to bring the net NPA below 4% for PNBHOUSING as that has been the case with some other NBFCs. Kapish Jain CFO answered that regulations are currently not applicable to HFCs. They are more for NBFCs currently. So, there is no soft regulation and would like to keep it at around 4% or lesser than that.

• Kunal Shah of ICICI Securities enquired about the INR829 crore NPA, if it’s largely retail or if there is corporate also that is getting classified. Hardayal Prasad, CEO said that it’s all retail and there is no impact on the corporate.

• Sharaj Singh from Laburnum Capital queried about the Unnati side, any light on the sourcing and underwriting processes followed. Hardayal Prasad, CEO answered that in Unnati, the company has categorized the loans under INR35 lacs segment for both salaried and self-employed.  For salaried, it has a few rigor points in terms of the salary credits in banks accounts etc. The self-employed is a segment wherein they are less organized in terms of filing regular ITRs and having the regular bank credits. The CEO added that there is a mechanism in place for checks.

• Sharaj Singh from Laburnum Capital also asked about other areas of focus than Unnati to grow the entire book of the company. Hardayal Prasad, CEO replied that other than Unnati, non-housing is a segment which clearly the company has some focus on and PNBHOUSING will augment more business in that space also.

• Shubhranshu Mishra of Systematix Group  asked about the salaried employee split on the AUM mix, in terms of PSU, government etc. Hardayal Prasad, CEO replied that in retail, the salaried largely is 60% Cat A profiles, comprising of government employees and other established companies. The Category B and C constitute the balance, around 40%, in which Category B has a larger share.

• Sameer Bhise from JM Financial Services enquired about the yield on the Unnati book as of now. Deepika Gupta IR said that the incremental ROI for Unnati for Q3 FY ’22 is 11.26%.

• Aditya Jain of Citigroup asks about BT outs of 18% and what was the level of it last quarter and also what was a normal pre-COVID level. Pankaj Jain COO commented that BT out percentages have remained similar more or less. Going forward the company expects BT out to see reduction and PNBHOUSING has arrested the overall attrition on IHL. On the non-IHL part the company is working hard to reduce it.