Sir, we all learn something new everyday. It will be nice to know about your summary of learnungs in the case of PNB Housing.
- Never buy stocks in large quantity during sector bullishness-Last year HFCs were on fire
- Do not blindly follow famous investors- You know whom I am referring
- PSU name tag and the scandal of PNB is a drag
- When overall market is weak - good performance does not matter.Wait is invariably longer and so opportunity costs are higher
- In the Indian context very few stocks are real compounders where you can invest reasonably large quantities-all the rest need to be very watchful or prone to sudden weakness -no reasons known
Have you identified such stocks?
A stock doesn’t move for a year and investors have 10 learnings, compounding needs patience and that is a rare trait in investors… and we all know compounding is not a linear line
Question we should be bothered about is: has it shown any deterioration in performance… answer is no…it is faster growing HFC with improving ROEs… Who could have predicted all these events 1 year in advance… well if you see the picture 3 years forward… you are probably looking at 12PE 3 years ahead and may be 2.2x book… Can it stay there?
Now one can look at 3 years forward picture for other NBFCs and take his call… if scared one can just diversify, as there is a sector tailwind, into likes of: Edelweiss, Piramal, Bandhan, Bajaj Finance etc(just examples of strong growth and able management NBFCs)…
On following key investors, the story remains true for investors and all humans… heads(favourable event)=“its me”, tails(unfavourable event)=“luck/govt interference/global markets etc etc” … having said that if you like someone - follow his complete portfolio along with %allocation, not 1 stock.
Narayana Murthy’s investment arm, Catamaran Management Services Pvt during Demonetization sold all stake in Canfin homes. Canfin homes was at lower circuit at 1250. Next six months it went to 3300! In fact that was the Low for the Demo period.
We should understand that Carlyle has sold only 4.8% stake out of 37%. If there was any issue related to fundamentals or future growth, they would have sold the total holding. This should be looked as a profit booking/fund raising exercise by a stake holder. Recently Tata sold 1.63% in TCS at 5% discount and the stock price has gone up by ~18% after it.
Disc: Invested and will add more if it corrects more.
If somebody can explain. Besides all(bond yield, dollar, crude, psu promoter)which is unknown to us but known to market. In last one and half years i made no return out of this. It posted good earnings, solid growth, best asset quality qtr after qtr .What could be the reason may be i dont understand.
Disc= 20% of my portfolio. will add more if corrects more.
I also don’t understand, however rising costs(due to rise in bond yields) with not an equivalent rise in lending rates seems to be the top reason. They also have good amount of money borrowed for short term at lower rates which will get repriced/replaced with higher rates in coming quarters…and their proportion of such borrowed money is comparatively higher than other HFCs…, so they get affected slightly more. Having said that I too am invested (almost similar as you) and I continue to wait patiently for more positive quarters(like previous ones) which I assume will make market take note and re-rate it again. I am sure you might have listened to latest conference call, Sanjay Gupta seemed fairly positive and confident of growth.
Many of us are in similar situation.Couple of things are impacting:
- HFCs as a sector is down except of course Gruh
- PSU tag is probably impacting for the time being
- Mr Market is not in a good mood now.Remember last year how it vertically moved up-now the correction.
- Results in the short term does not matter.What matters is perception of the players. I am hoping perception/mood will change in H2 2018.
- There are of course headwinds like elections/interest rates etc but if there is a tailwind it will again start moving up.
Perception/Brand value plays a significant part in market moving the prices.There are some stocks which defy gravity but most of the others like PNB get battered irrespective of the results. The only solution for us is to wait patiently and not to increase exposure in imho
I too am in the same boat. But we must realise that this is still a very expensive stock trading around 25 PE and almost 4x Book value. So the market still likes the company a lot. It’s just that it was very expensive 1 year ago and now is a little less expensive.
It might not move in the next 2 years also if rerating continues to occur.
But this company has a long run way and if the management continues to perform we could get a great opportunity in the next few years to buy a great franchise.
Also, while many HFCs have got affected (from growth and even profitability perspective, some with NPA build up), PNB Hosing is continuing to march ahead with great growth with almost negligible NPAs…so while price-wise its not performing for now…from quality perspective(growth with quality)…it STANDS OUT from the HFC crowd (atleast for now…)
Rising cost of capital will only effect pnbhf? The biggest tailwind of the business is the sector itself. In other sector a company growing at furious pace,having excellent product portfolio, huge sectoral tailwind, probably best management is enjoying huge premium. Pnbhf having all positives still trading at per IMHO.Thats why a bit confused. But every qtr gone by the stock becoming more cheap.Market is obsessed with growth. Interesting to watch how long market can ignore the leader.
All will be effected. HFC is a commodity business I believe but with a huge opportunity for many years, The one that will survive for long(in business as well as from stock market pricing point of view) has to be very efficient- lowest cost one and that not only grows, but grows with negligible NPAs.
I beleive that Can fin homes is available cheaper compared to PNB Hsg Fin
Compare the growth of Canfin vs PNBHF for last year - the year when things became a little tough for this sector(RERA etc…). Not sure of any other factor, but from how it has grown in tougher conditions beating other HFCs, and grown with quality…makes me believe there’s something unique and extraordinary in PNBHF management. How the stock price will behave - no idea.
PNB is gojng to sale a par of its stake in PNB Housing. Any idea what will be the impact of this? Will the Housing finance can retain the PNB brand name still?
At CMP, the market cap of PNB Housing is around 19000 crores. PNB holds around 33%, so even if they sell their entire stake, it would fetch only around 6300 crores at CMP. So, if they want to raise 13000 crores, they will have to sell a substantial stake I guess unless until the other pieces they plan to sell are worth many thousands of crores. Does anyone know the value of the other subsidiaries and properties they plan to sell as per this report?
As per ET report, Carlyle wants to exit completely and so does the parent bank PNB.
If it’s true, then this is a chance for anyone to buy promoter - ownership of PNB Housing along with 2/3 rd stake for about 12000 crores at CMP. Would be interesting to see the bidders list if the news is true.
What would the company be named when PNB sells its stake? uncertainties keep lingering in this stock…