PNB Housing Fin - Fast Growing HFC


Confident of beating industry growth: PNB Housing Finance

So the superb run continues

Press Release:

Investor presentation:



appears to be on a highway to realize “ek laakh crore ki kahani” assertion from Ramdeo recently!

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Does the falling interest rates , have any negative impact on the margins of HFC,s . Will the interest rates charged by the loan giving co. Also come down?

@Finrahul9: Falling interest rates will lower the cost of borrowing for the HFC. However, since banks will start to offer loans at cheaper rates, the HFC will reduce the rates at which it lends to its customer to stay competitive. There can be some time lag between both these reductions. As long as the spread remains roughly the same, it should not lead to any erosion for the HFC.

To me, the only point of worry right now is the loan book composition of PNB Housing. With 30% non housing loans, the risk on asset quality detoriation is much higher as compared with HFC’s like Can Fin. But then again, PNB is growing much faster.

Disc: Invested in both Can fin and PNB Housing


You are right about the loan book mix here. One more thing i noticed is the dilution PNB housing is doing vis a vis Can Fin. Can fin has not diluted the equity in last 10-12 years. Whereas look at PNB housing. The growth it is showing is realistically half of the actual growth… as equity is getting diluted at a ferocious pace. If you are growing at 40% CAGR but diluting equity at the same time at a hectic pace, actual returns are much lower. One can argue that it is good to dilute equity at higher p/b. Well, yes, it is. But growth should be seen relative to the dilution. Growing at 20-25% CAGR without dilution is same as growing at 45% CAGR with 50% dilution.

Anyways, all well till the going is good. But any moderation in growth wouldn’t not be taken lightly by the market at these valuations.

Another thing i am worried about is the subsidies that are going to come for affordable housing, they are actually reducing the total loan value of the loan i.e. if the house costs 20 lac, and subsidy is 3-4 lac, loan would now be 16 lac not 20 lac. So, this is going to impact the growth as affordable housing is what everyone is eyeing. Also, one should consider the quality of loan book while lending to affordable segment. Their pay back power and stuff. No one is giving a damn about all these negatives and is getting blinded by growth.

We shouldn’t forget that when getting loans is easier, and the borrower is spoilt with choice, things will go downhill.


Equity dilution - You are comparing this Quarter with one which was before IPO. Company as raised enough capital so should not need capital for next 2 years alteast.

@Mridul : Quoting from the last con-call trascript, Sanjay Gupta said that 20% incremental disbursement per month of individual housing loans is coming from this affordable/smart housing category (page 7 of concall transcript for Q4).

To me the impact of subsidy on this 20% incremental disbursement on individual housing loans doesnt look too big (especially since they are growing very fast). The incremental home loans which will be given out due to this subsidy scheme will outweigh the reduction in book due to this subsidy is my estimate.

On asset quality: As can be seen below, the disbursement for Q1 FY18 ( investor presentation for Q1 FY18, Slide 21) shows a higher % of non-housing loans. This to me is something which needs to be closely monitored.

Will wait to read the concall transcript for the call held today. Will give a much better idea

Sanjay Gupta seems super confident of growing at atleast 1.5 times the industry average (that might mean 30% growth atleast) and with NPAs much lower than the industry average. They don’t need further capital for next 30-35 months for this growth! Fund cost should go down further from 8.09% at present as they raise more money at around 7% via NCDs and their current high cost deposits retire. Great times it seems to be an investor in this company.


Source of information / book

A good article on the journey of PNB Housing Finance to become the ‘fastest growing’ Home Financing Company in India. Transformation of employees, technological changes, revamping physical infrastructure, adopting a new target operating model and new brand positioning to change public perceptions, improved customer reach and augmenting the delivery model were all part of PNB Housing ’s massive revamping campaign:


Q1 RESULT update from Arihant capital with target price 1700

pnb hsg q1fy18 update.pdf (798.5 KB)

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Pnb Housing Q1FY18 Earnings Concall…

PNB HSG Q1FY18 CONCALL.pdf (333.8 KB)

CNBC Tv18 is covering PNB HOUSING STORY…


Not to forget that it is a marketing feature by the company (paid for by PNB Housing).

Motilal Oswal Initiating Coverage on PNB HFC

Stallion asset view on Housing finance NBFC and management meet with PNB Housing finance.

Disclosure: I am not a subscribed member of the above SEBI registered advisory. The link is to the free section of the site/ blog.


Hi All.

PNB housing is planning to raise 12000 Cr, in that issuance 6000 cr of secured and unsecured non-convertible debentures and USD 1000 million in one or multiple trenches.
As far i remember the management indicated they have sufficient funds till 30 to 35 months, so not sure why they would need to raise again ?? and if this an indication any possible raise of interest rates in future ?? or any other indication or is it usual fund raising.