Doesn’t the news above sound fishy and appear illogical? How can PNB retain management control with 10% stake? Was such a news leaked to prevent the share price from spiking? Or PNB’s negotiation tactic?
Read the latest news below:
Mehta said the bank has received bids from buyers to its stake sale in housing finance subsidiary PNB Housing Finance and is now negotiating
What stake sale are you talking about? Having decided that the prime days of PNB housing are over, the parent goes for stake sale. During the sale process, their partner Carlyle backs out since the market has crashed. Fools tread where Angels fear to enter! With public money to throw away, PNB continues the stake process to give away a company which had grown bigger than the parent in market cap, and finding that PNB housing is still growing by 30% invents an excuse that their subsidiary is their competitor! If your subsidiary is doing the housing finance business better than you, why don’t you acquire more of it and outsource the housing finance job to them? Fortunately there are wiser heads, and market is looking up. This one is the market leader for housing finance, having grown more and faster in the liquidity crisis last quarter where even Gruh Finance and HDFC bit the dust. Tell me, who can beat Sanjaya Gupta in sales growth? This must be the Challenger to HDFC, the king. And I have vested Interest.
I don’t see it atleast in current FY as we have less than 2 weeks. Next FY is expected to be promising with general elections & the resultant new (could be same) Govt in office for next 5 yrs (assuming no hung verdict). If it helps the broader indices, we may see more activity from PNB management as the major reason of disruption of recent stake sale process was crash in major indices.
Everyone says look at p/b for financials. Why are we looking at p/b and not p/e, over a period of time? If two banks have different ROA, say one is 5 and the other is 1, wouldn’t the first one command a significantly high p/b? Shouldn’t we value any business as sum of all the free cash to the eternity (or till the company exists) discounted to today’s value?
Just trying to understand why should not we use p/e. Appreciate any insights.
Absolutely. Earlier (meaning a couple of years back) we could say that due to expansion expenses, the RoA would be low and correspondingly P/E would be high. But now, things have normalised and the debt to equity ratio is also normal. So you could look at p/e or p/b as per your wish. Looks like Valuations have come off.
“Post these transactions, PNB said it would continue to hold strategic stake of 19.78 percent of the paid up capital of PNBHF and shall continue as a promoter and strategic shareholder of PNBHF.”
This could have positive impact on company’s ratings imho.
Dhfl gone. Now India Bulls housing. The thesis that PNB housing finance will be the lone Challenger to HDFC, and will eventually lead the housing finance pack is playing out as predicted.
PNB partial stake sale and keeping rest, kind of not giving good sign, as they are not getting good buyer to buy at higher prices. Also stock prices not going any where is giving indication that volatility will remain, on top the equity dilution should come in sometime. Real estate also yet to pick up. I believe these things can actually slowdown the company. whats your view ?
ROE will improve but to maintain high growth you have to dilute the equity as the gearing ration is coming close to pre-IPO level, which will again hit the ROE. I am sure they can keep up with growth which is not big problem, but spread is declining and these IBHF & Gruh will have reduced borrowing cost and stronger liability side. New NHB proposal if implemented could be little negative on short term.
PNB is not just going to stop selling they will wait for the prices to come up and selling pressure kicks in and everything we are experiencing will come all over again.
PNB housing has been put on credit watch by CARE. Was this the reason the stock has been on a free fall? From peak price of Rs 1700 to 700 ! Not a good sign. Will more skeltons start to tumble out as the price keeps nosediving?