Tuesday's trading session will be focused on PNB Housing Finance shares because, according to some media sources, US-based private equity company Carlyle plans to sell up to a 6.4% interest in the shadow lender through an open market deal.
IIFL Finance is the issue's banker, and according on the term sheet it released, Quality Investment Holdings, a Carlyle affiliate, wants to sell 1.66 crore equity shares at a floor price of Rs 775 each, raising a total of Rs 1,256 crore. The floor price is set at Rs 794.90 per item, which is 5% less than Monday's closing price.
The PNB Housing stock has underperformed this year, rising just 1.14 percent so far in 2024, compared to the BSE Sensex's almost 12.5 percent rise thus far. Carlyle's ownership pattern for the June 2024 quarter indicated that it owned 32.68 percent of the home financing player.
In the recent year or so, PNB Housing has shifted its focus to retail and decreased the amount of corporate loans it holds relative to its total assets under management (AUM). Its current goal is to increase the proportion of its overall retail disbursements that go toward affordable housing throughout the medium run.
PNB Housing said this week that its net profit for the quarter that concluded on June 30, 2024, at Rs 433 crore, increased by 25%. A year earlier, its net non-performing assets (NPA) dropped to 0.92 percent, while its gross non-performing assets (GNPA) decreased by 241 basis points (bps) to 1.35 percent.
The amount disbursed increased by 19% annually to Rs 4,398 crore, of which 99% was made available for retail use. Worthwhile book was valued at Rs 2,361 crore. Net interest income (NIIs) for the firm increased 4% year over year to Rs 651 crore. During the quarter under review, the reported net interest margin (NIM) was unchanged at 3.65%.
Given its consistent performance on ROA criteria, appealing values, and comparatively lesser asset quality risks, JM Financial anticipates a re-rate for PNB Housing Finance. "We maintain 'buy' with a revised target price of Rs 1,200 (1.7 times FY26E BV) in return for RoA of 2.6 percent by FY26E," it stated.
Motilal Oswal is still adamant about its theory, which is based on the management's ability to turn this franchise around and a robust retail loan CAGR of 17%, an improvement in NIM in 2HFY25, benign credit costs from improved asset quality, and recoveries from the written-off pool.
"The stock is trading at 1.1 times FY26E P/BV, and as investors become more confident in the company's continued retail execution (across prime, emerging, and inexpensive), we think the risk-reward is favorable for a re-rating in the valuation multiple. It stated, "We continue to maintain a 'buy' position with a target price of Rs 1,015."
