PNBHOUSING - PNB Housing Finance Limited Share Price

Outlook and Major Points from PNB Housing Finance Management:

1. Growth Targets:

• Retail Loan Book: Aiming for Rs.1 lakh crore by FY27, with a 17%+ YoY growth. Retail book reached Rs.70,676 crores (up 17.5% YoY) in Q3FY25, the highest in 22 quarters.
• Segment Mix Shift: Targeting 15% contribution from Affordable (Rs.5,000 crores by FY25-end), 25% from Emerging markets, and 60% from Prime by FY27. Affordable book doubled to Rs.3,838 crores in 9M FY25.
• Disbursements: Retail disbursements grew 31% YoY to Rs.5,380 crores in Q3FY25, with Affordable and Emerging contributing 38% (vs. 29% YoY).

2. Profitability & Margins:

• NIM Improvement: NIM rose to 3.7% (Q3FY25), with incremental yields in Affordable (12.14%) and Emerging (9.8%) segments. Aiming for NIM >4% by FY27.
• ROA/ROE: ROA at 2.51% (annualized), ROE at 11.81% (9M FY25).
• Cost Management: Cost-to-ATA ratio maintained at 1"“1.1%.

3. Asset Quality:

• GNPA Reduction: Improved to 1.19% (Q3FY25 vs. 1.73% YoY), below industry averages. Recoveries of Rs.53 crores from written-off accounts led to negative credit costs (-19 bps).
• Provisions: Corporate book stage-2 slippage (Rs.450 crores) expected to resolve in Q4.

4. Liquidity & Capital:

• Strong liquidity with Rs.6,400 crores on-book and Rs.8,000 crores undrawn sanctions. Capital adequacy at 28.8%.

5. Expansion & Initiatives:

• Branch Network: Adding 50 branches in Q4 (total 305), focusing on Tier 2/3 cities. Affordable branches to reach 200 by FY25-end.
• Technology: Core platform upgrades and cloud-based LOS rollout enhancing efficiency.
• PMAY Scheme: Partnered with NHB under PMAY Urban 2.0, processing Rs.675 crores in disbursements.

6. Guidance:

• FY25: Retail book growth to exceed 17%, with continued focus on high-yield segments.
• Medium-Term (FY27): NIM >4%, credit costs ~25 bps, leverage 5.5"“6x, and mid-teens ROE.

7. Risks & Mitigation:

• Rate Cuts: Expect ~10 bps borrowing cost reduction per 25 bps repo rate cut, with NIM stability through mix shift.
• Asset Quality Vigilance: Monitoring self-employed/informal segments; no stress signals observed. Portfolio diversification and pre-delinquency tools in place.

Summary: Management remains confident in achieving long-term growth targets, driven by Affordable/Emerging segments, tech investments, and robust asset quality. Margins and profitability are set to improve with favorable mix shifts and cost controls.

Major Questions and Answers from PNB Housing Finance Q3 FY25 Earnings Call

1. Question: What are the medium-term expectations for ROE, leverage, and credit costs, considering revenue mix improvement and normalized credit costs?
Answer: The company targets a retail loan book of Rs.1 lakh crore by FY27, with Affordable (15%), Emerging (25%), and Prime (60%) segments. They aim for NIM over 4%, credit costs of ~25 bps, leverage of 5.5"“6x, and mid-teens ROE.

2. Question: Are there risks to asset quality from self-employed/informal borrowers amid economic slowdown?
Answer: Demand remains robust. No stress observed in mortgage portfolios due to rigorous underwriting, pre-delinquency monitoring, and focus on bureau scores (84% of new loans have scores >700).

3. Question: What is the runoff rate, and how much is due to balance transfers (BTs)?
Answer: Annualized runoff is 16.5"“17%, with BTs at 5.5"“6%. Retention strategies include repricing policies, and closures are managed to align with growth targets.

4. Question: Why did Stage-2 assets increase in Q3?
Answer: A single corporate account (in SMA-2 for two years) contributed to the rise. Principal repayments (Rs.200 crore over two years) and resolution progress are expected to revert it to Stage-1 in Q4.

5. Question: Will Q3's disbursement challenges (e.g., Karnataka, Maharashtra) impact Q4 growth?
Answer: Disbursement growth was affected by regional disruptions, but normalization is expected in Q4. The company remains confident in achieving 17%+ retail book growth for FY25.

6. Question: Why did Prime disbursements decline sequentially?
Answer: Strategic focus on higher-margin Emerging/Affordable segments and regional disruptions contributed. Growth in Prime aligns with targets, with incremental yield improvements (5 bps QoQ).

7. Question: How will repo rate cuts impact NIMs and borrowing costs?
Answer: 70% of liabilities are floating; a 25 bps rate cut reduces borrowing costs by ~10 bps immediately. Margins aim to remain stable via mix shift (Emerging/Affordable) and yield improvements.

8. Question: What is the recovery outlook for the written-off pool?
Answer: Corporate written-off pool (Rs.1,250 crore) expects 67% recovery over three years. Retail pool (Rs.450 crore) targets Rs.45"“50 crore/quarter.

9. Question: How is the Affordable segment's asset quality and growth trajectory?
Answer: Affordable book doubled to Rs.3,838 crore in 9M FY25, targeting Rs.5,000 crore by FY25-end. Gross NPA at 0.2%, with yields improving to 12.14% (up 54 bps YoY).

10. Question: What is the path to 4%+ NIM by FY27?
Answer: Mix shift toward higher-yield segments (Emerging/Affordable), corporate loan revival, and recoveries will drive NIM expansion. Current NIM is 3.7% (up 2 bps QoQ).