ET Markets
12,256.1575.8
Stock Analysis, IPO, Mutual Funds, Bonds & More

PNB Housing shares surge on better than expected Q2 numbers

PNB Housing Finance is in the process of raising Rs 2,000 crore equity this year.

ET Bureau|
Oct 26, 2019, 09.46 AM IST
0Comments
ThinkStock Photos
Housing-Finance-1---TS
“The numbers are better than expectations,” said Sanjeev Jain, VP, equity research, Sunness Capital India.
PNB Housing Finance shares rose to an intra-day high of Rs 558 in Friday’s trade before closing up 10% at Rs 490.90 after the company reported a less-than-expected rise in bad loans even as analysts predicted a deterioration in asset quality for the entire sector in the next few quarters. The broader Sensex closed up 37.67 points at 37058.

Asset quality for housing finance companies (HFCs) may worsen for both retail loan as well as construction finance segments, rating company ICRA said, pointing out that gross nonperforming assets of HFCs’ home loan segment are likely to rise to 1.3-1.5% over the medium term from the current 1.2%.

In contrast, PNB Housing’s gross NPA ratio stood at 0.84% of total loans as of September 2019 against 0.45% a year back, better than the industry average.Net NPA stood at 0.65% as against 0.35% in the same period. The housing finance company announced the financial results after market hours on Thursday.

Its net interest income and net profit grew by 36% and 45%, respectively, year-on-year.

“The numbers are better than expectations,” said Sanjeev Jain, VP, equity research, Sunness Capital India.

“The stock was already beaten down from the last one year. On the fundamental front, PNB Housing is sound. Any positive visibility on its business front will help boost the stock price. Also, it has made excess provision out of the benefit from the recent corporate tax cut. So going forward, it will support its earnings,” Jain said.

PNB Housing April-September loan disbursement, however, shrunk as it cut down wholesale loans. Disbursements stood at Rs 12,604 crore against Rs 18,172 crore in the previous corresponding period, in sync with the sectoral trend.

The company has taken a cautious stance on loan disbursement, which is likely to remain muted until equity capital is raised, said Motilal Oswal Institutional Equities, adding that PNB Housing increased its stage1 & 2 provisions by 20 basis points quarter-on-quarter to 0.80%.

The exposure to the five accounts in the watchlist reduced to Rs 830 crore in first half from Rs 910 crore in FY19. The company is holding 33% provisions against these accounts.

PNB Housing Finance is in the process of raising Rs 2,000 crore equity this year.

On-book housing loan portfolio for HFCs and non-banking finance companies grew at a much slower rate of 3% year-on-year for the quarter ended June 2019 owing to lower disbursements in the first quarter and higher portfolio sell-downs, ICRA said.
Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service