The Rise of PNB Housing Finance Limited

“We are now slowly trying to change the profile mix, product mix, and also in terms of ticket size. Now we are trying to get more granular and we want to focus on retail. We’ve seen some improvement in terms of the mix of what we want. It’s hardly one quarter, so, it will take some more time to see this impact coming in. So, our salaried share has increased incrementally. Our profile in the product mix, we have seen that HL is gaining more traction when we compare to non-HL, and in the ticket size we are seeing that up to Rs.1 crore the share of the percentage of cases which are being booked are on the increasing side.”

– Mr. Girish Kousgi, MD & CEO in Q3FY23 Concall

Stock Data
Ticker	PNBHOUSING
Exchange	NSE
Industry	FINANCE

Price Performance
Last 5 Days	-1.32%
YTD	-10.05%
Last 12 Months	+30.22%

*As of 17.04.2023

Company Description:

PNB Housing Finance Limited (PNBHFL) is one of the leading Indian housing finance companies, incorporated in 1988. The company is a subsidiary of Punjab National Bank (PNB) and is headquartered in New Delhi, India. It provides housing finance services to individuals and corporate entities for the purchase, construction, repair, and renovation of houses and commercial properties. 

With a rebound in the Indian economy post-pandemic restrictions, PNB Housing Finance has experienced growth in its financials. The company’s recent earnings report reflects strong profits, margins, and a sound capital position. Also, cost management reflects operational efficiency, while the management remains optimistic in terms of improving asset quality.

Key Strengths:

• Strong Parentage: PNB Housing Finance Limited is a subsidiary of Punjab National Bank, which is one of the leading public sector banks in India. The strong parentage provides the company with a stable source of funding, access to a large customer base, and the expertise of the parent company. This is showcased by the company’s consistent and growing profits.

• Diversified Product Portfolio: PNB Housing Finance Limited offers a diversified product portfolio, including home loans, loan against property, and construction finance, among others. This helps the company cater to the needs of a wide range of customers and also reduces its reliance on any single product.

• Wide Distribution Network: PNB Housing Finance Limited has a wide distribution network, including 106 branches and 76 satellite centers across the country. The company also has tie-ups with several banks and other financial institutions, which helps it reach out to a larger customer base.

• Technology-driven Processes: PNB Housing Finance Limited has invested in technology-driven processes to improve operational efficiency and customer service. The company uses advanced analytics, automation, and digital channels to enhance its processes and customer experience.

• Experienced Management Team: PNB Housing Finance Limited has an experienced management team with a strong track record in the financial services industry. The team has a deep understanding of the housing finance sector and has been instrumental in the company’s growth and success.

Key Opportunities:

• Growing Housing Finance Market: The housing finance market in India is growing at a steady pace due to increasing urbanization, a rise in disposable income, and favorable government policies. PNB Housing Finance can leverage this opportunity to expand its business and increase its market share.

• Affordable Housing Segment: The affordable housing segment in India has significant potential for growth, and the government has introduced several initiatives to promote affordable housing. PNB Housing Finance can tap into this segment by developing specialized products and services that cater to the needs of this market.

• Digital Transformation: The use of digital channels is rapidly increasing in the financial services sector, and PNB Housing Finance can leverage this trend to improve customer experience and operational efficiency. The company can invest in advanced analytics, automation, and digital channels to enhance its processes and customer service.

• Cross-selling Opportunities: PNB Housing Finance can leverage its strong parentage and wide distribution network to cross-sell other financial products, such as insurance and mutual funds. This can help the company increase its revenue and customer base.

• Infrastructure Financing: PNB Housing Finance can also explore opportunities in the infrastructure financing sector, which is critical for the country’s economic growth. The company can leverage its expertise in project financing to provide funding for infrastructure projects and tap into this growing market.

Financial Results:

PNB Housing Finance Ltd.’s net interest income in Q3FY23 rose 67% to ₹ 734 crores. Consolidated Profit After Tax came at ₹ 269 crores showcasing a 43% rise YoY over the corresponding period.

The total loan book climbed from Rs. 57,845 crores in Q3FY22 to Rs. 58,034 crores. Its net interest margin (NIM) increased to 4.68% from 4.14% thanks to a spread on loans of 3.83%, up from 3.38%.

The gross NPA ratio decreased from 6.06 to 4.87%, and the net NPA ratio stayed constant at 3.22%, indicating an overall improvement in asset quality.