PNB Housing Finance Ltd Q3 FY23 Earnings Conference Call Insights

Key highlights from PNB Housing Finance Ltd (PNBHOUSING) Q3 FY23 Earnings Concall

Q&A Highlights:

• [00:12:21] Abhijit Tibrewal from Motilal Oswal asked about why margins expanded in the rising rate environment, and how long this one-off from assignment loans can continue. Girish Kousgi MD said that for the company it should look at NIM of 3.2% and spread of 2.2%. Currently NIM is at 4.68% and spread at 3.83%, but the guidance is 3.2% and 2.2%.

• [00:18:06] Sharaj Singh from Laburnum Capital enquired about disbursement falling QonQ, despite the expansion. Girish Kousgi MD answered that in the last two months, PNBHOUSING has seen good traction on disbursements and closures. The company is currently at 7% book growth for retail customers and expect to reach around 10% by the end of 4Q23. For next year, expects disbursement rate of 22-25% of loan book and book at 17%.

• [00:19:59] Sharaj Singh from Laburnum Capital enquired about the driver of NPA declining to 4.87% from 6.07% QoQ. Girish Kousgi MD answered that it’s due to slippages being controlled, NPA recovery and certain one-offs in both retail and corporate.

• [00:21:02] Sharaj Singh from Laburnum Capital queried that on the floating part of borrowings, how much of the rate hike is yet to be seen. Girish Kousgi MD answered that most of it is done and there is some bit which will happen in few weeks.

• [00:21:52]  Sharaj Singh of Laburnum Capital asked about total provisions coming down QoQ from INR2,100 crores to INR1,760 crores and if any write-offs were taken. Girish Kousgi MD replied that the company has taken a write-off, a bit in retail and corporate.

• [00:22:50] Anand Venugopal at BMSPL Capital enquired about provisions remaining high and not being able to get good ROEs. Girish Kousgi MD said that leaving the one-offs, it is very less. The focus is now on retail loans, not just prime, but also affordable ones. In terms of disbursement growth, book growth, and profitability, there should be good traction in the coming quarters.

• [00:29:48] Ashwini Agarwal from Demeter Advisors enquired about the focus on the affordable side; customer, ticket size and competition. Girish Kousgi MD replied that on the affordable side, there is opportunity in big cities, Tier 2 and Tier 3 towns. For developers, ticket size is of INR16-17 lakh for affordable, and INR26-27 lakh for prime. PNBHOUSING will benchmark with companies whose ticket size is in the range of about INR20-22 lakh, with 70-80% of that being affordable segment.

• [00:32:08] Vikram Damani of Damani Securities asked about when clarity on the rights issue can be expected. Girish Kousgi MD answered that PNBHOUSING is awaiting confirmation from SEBI to take this forward. And the overall timeframe is by end of March or first or second week of April.

• [00:33:00] Vikram Damani of Damani Securities enquired about the cost to income figure for 3Q. Girish Kousgi MD said that for nine months it’s 18%, six months it’s 15% and for 3Q23 it’s 14.8%.

• [00:34:53] Aditya Doshi with Chanakya Capital asked about the reason for fee income reducing for last two quarters. Girish Kousgi MD said that fee income related to disbursements is deferred and is accounted in the interest income line.

• [00:48:07] Pratik Chheda from Guardian Capital asked about the yield rate on the affordable piece. Girish Kousgi MD answered that the affordable book will surely generate a higher yield vs. prime. However, some fluctuation will continue in future quarters.

• [00:49:45] Nidhesh Jain of Investec asked about incremental yields on affordable housing and prime home loan segment. Girish Kousgi MD clarified that the yield seen now is largely from prime and affordable is going to be about 125-150 bps higher. In terms of percentage, prime is 9.11% and affordable 9.6-9.7%.

• [00:56:11] Sandeep Joshi of Unifi Capital asked about the performance of corporate book in terms of any lumpy slippage expectation in near term. Girish Kousgi MD answered that PNBHOUSING is adequately provided and don’t expect any slippages in the next few quarters.