PNB Housing Fin - Fast Growing HFC

(RamanTiwari) #574

I don’t have exact answer, but they might have only a small exposure, because PNB housing was very small when most of these projects were sold aggressively. For the same reason, they have very small exposure to Jaypee… around 2011-2013 when the real estate market was at peak just PNB housing wasn’t there. They have expanded aggressively post 2014 - and by then most risks had come out in NCR housing projects.

(RamanTiwari) #575

Look at borrowings profile - NHB and deposits is approx 24%, remainder is funded from Banks/ Bond market.

(Julian) #576

The fall in the share price today could be an indication that the stake sale might not go through. Yesterday Latha indicated the same in CNBC. Probably the insiders in the know are selling the stock.

(mrai74) #577

We saw it in 3 digits… although others have stabilized or trying to stabilize after recent crack but this scrip keeps on sliding… Is there a news to follow the prices… normally prices follow the news but sometimes we have seen vice versa as well

(Julian) #578

FII directive to sell all stocks with promoter issues, following Yes bank correction, has led to a carnage on Dalal Street, which started with DHFL, IBHF and then spreading to all other housing companies. The liquidity crunch will affect the results of all NBFCs. Will Sanjaya Gupta, prove to be the exception, as he had done during demonitisation and RERA slowdown when he was the lone housing finance company which stood up to the onslaught. Can this tried and tested warrior stand up to the test? Foreseeing the liquidity crisis, the crafty one, had wilfully slowed down his loan disbursement which was only due to the macros and not due to lack of capacity, competency and capability as revealed by him during the latest concall. Still have 30% of my portfolio exposed to this stock.
Below article is interesting and enlightening

View: NBFC party over, at least for now

(RamanTiwari) #579

Looks like Price movement is telling the story that deal is off

(mrai74) #580

We are fast approaching IPO prices. As even a retail investor don’t want to sell his holding on IPO prices, I find it tough that promoters / big stake holders will do so.

For me the deal is OFF… with crossed fingers :slight_smile: …will wait for news to follow

(KrishnaA) #581

PNB housing is sliding continuously.Today even Repco’s, Gruh slide halted but this counter continued. Valuations are back to couple of years to IPO prices.I think to market even the stake sale looks uncertain in current conditions so getting more bashed. The way canfin has cracked after stake sell off and current NBFC massacre looks scary.
Though PNB is much better placed then Canfin in terms of growth shown and ALM.but current market any news of stake sell off will trigger another round of sell off. Stake Sell on will trigger Up side. So stock is evenly poised.

(dprashant) #582

Interesting views from BM.

(KrishnaA) #583

No talks on PNB Housing any more by BM.

(Vegeta) #584

Here’s an excerpt from BM interview in Aug 2017

“If you have zeroed down on financials, then you see the cost of deposits, the cost of borrowings and whether they can issue debentures, whether it is an NHB finance loan. So, there are two ways to attack it. One is because you cannot charge more to anyone because nobody is going to take a car from you if you charge 1% just because you have served him a cup of cold coffee. So you have to look at a company which can keep its costs under control which is the opex and which borrows cheap and borrows well.
A company which we own – PNB Housing Finance – somebody should just go and see that balance sheet. Again, it is not a recommendation. When interest rates were high, they borrowed short. They said in one year we are going to see an interest rate fall and that is then we are going to go and borrow long. Most textbooks advise asset liability match so your assets and liabilities have to match but money is made by doing an asset liability mismatch. What it means is in short term, rates are lower and long term rates are always higher. So obviously you borrow short and you lend long that is the way to make money. When I visited Repco three years back, they has a one year, two years, three years, five years asset liability match. At that time I got impressed but now I realise money is made when your asset liability does not match because then you borrow short, you borrow at lower rates and you lend long, at higher rates. There are too many things to look at about it but basically that is how we go about it.”

I think Ultimately in Financial services, GREED is the sin that most directly correlates to risk. Some companies chose to be conservative and in turn get moderate stock price movements in good and bad times. The more greedy ones tend to have wider swings and once in a while, some succumb.

Source -

(mrai74) #585

Till last month everyone had different opinion about HFCs, now old opinions need to be seen in today’s context.

(Julian) #586

As per Basant Maheswari top quality NBFCs (Top 20%) will bounce back and perform even better in the existing condition but low quality NBFCs should be sold immediately whatever be the loss.

I had sold some PNB housing and purchased some DHFL thinking that it was even cheaper, selling at book value. But BM advises to book losses in low quality NBFCs immediately. Hence I sold my DHFL, since I believe that over the long run, companies with good corporate governance will outperform poor ones, though not priced so cheaply. If PNBHF reaches the IPO price of low 800s it should bounce back, since there will be no sellers, all non promoters having purchased the stock during IPO. BM does not have a good opinion of canfin and repco in his latest interview.

(KrishnaA) #587

This is from the latest August 2018 investor PPT of PNB Housing.Can any one explain how ALM will impact them and how they are poised compared to others.It doesn’t look very bad from the details in the slide.

(Kumar Saurabh) #588

Financial companies take money from one side like FD (marked as liability ) and provide loans (marked as asset ). So, for simplicity let us in next 12 months, 100 RS of FDs maturing but on asset side only 80 RS available as there is a mismatch between tenure of lending n tenure of FD, then, these mismatch needed to be addressed by raising fresh liability I. In banking this is called ALM risk. Here, you can see , difference between asset n liability which comes approx 20% of liability maturing within a year don’t ve adequate asset side support n they will need to arrange for it . Now question is if they ve created assets at lower rate n if end up raising liability at higher rate , it can impact profitability but how much impact depends on many things like ability to raise liability at lower rate, share of asset in terms of fixed vs floating, ability to increase rates etc etc.


I would suggest everyone to evaluate by 10-14th Oct. Rates will be back to normal and good quality HFCs/NBFCs will back on their feet but smaller ones will continue to see tightening and they won’t be able to compete with PSU banks in the home loan segment. The govt. will do whatever it takes to avoid any blowups in a pre-election year.

Disc: No holding here

(dprashant) #590

Just curious to understand ,how you have arrived at 10-14th Oct dates ?
Any event that’s scheduled where this s expected to be addressed/sorted out ?
Or it’s guesstimate considering the build up that’s happening ?



Half yearly/quarterly tax outgo has tightened the liquidity which should ease by 2nd week of Oct. is what I understand talking to folks and confirmed by fund managers on TV. Govt. gets money and flows back to the system through banks and govt. payments/refunds.

(dprashant) #592

Got it …Thanks. some additional perspective from Prabodh Agarwal of IIFL

(Ashish) #593

Key monitoring parameters will be
NIM outlook for Q3 onwards
NPA especially LAP

Lastly clarity on stake sell

My Repco holding taught me about Management stance importance for Investor in case of a Crisis as if go they conservative then it’s good for company but not investor which flee the company due to Opportunity cost

Disc : Invested