PNB Housing | Management Guidance
Management said Q3 Was Good & Demand Remains Robust
Prime Book Is Growing At A Slower Pace
Corporate book will remain below 10% of the total book at all times
Retail book will touch Rs 1 lakh crore by FY27
Will Start Lending To Corporates; Which Will Aid Margin
Watch the interview here - https://youtu.be/xwB-7nLGwsg
I couldn’t find the right thread, but feel free to redirect me if there’s anything specific to Punjab National Bank.
Interestingly, I noticed there’s no dedicated thread on this, even though the bank has consistently reported over 100% profit growth quarter-on-quarter since March 2022.
What’s even more surprising is that despite posting over 100% PAT growth in the last two quarters, the stock price remains reasonably priced. Due to overall market conditions.
Note: I am invested in the stock, so my views may be biased. This is not a buy/sell recommendation.
The product mix of the company is changing for better. According to Q4 Results
Company is now moving towards affordable housing which attracts higher NIMs and letting go of lower NIM services.
Execution and overall growth of AUM needs to be tracked, along with ofcourse asset quality.
As you can see Affordable Housing has grown 183% YoY
D: Tracking to add position
While PNBHF will continue to grow the AUM and increase the share of Affordable, need to closely monitor asset quality, especially as they start to age.
A couple of things from the con call-
To increase the yield in falling interest rates environment, they will need to disburse to riskier class of customers. Management indicated this will happen. They will also increase LAP which is inherently risker than home loans. In Affordable, they have a high transfer-in (20-22%), which again indicates higher risk or lower pricing.
CEO said the bounce rate in affordable is about 11% and they expect to increase to closer to 15% as they increase lending to high risk customers, which is industry standard (per CEO).
For FY26 and FY27, they will be cushioned by recoveries. Beyond that they will need to increase NIM in order to maintain similar ROA.
At the current P/B, these risks seem priced in. But needs close monitoring on quality - as recoveries dry, if the aged loans start turning to NPA, it will be a double whammy.
Disc - invested.
