PNB Housing Finance
Estimate change
TP change
Rating change
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23 July 2020
1QFY21 Results Update | Sector: Financials
CMP: INR210
TP: INR210
Stable quarter; Moratorium rate declining
Neutral
PNBHOUSI reported 1QFY21 PAT of INR2.6b (v/s est. of INR600m). The beat
was driven by stronger PPoP and significantly lower credit cost.
Moratorium rate on the loan book declined to 39% in Phase 2 from 56% in
Phase 1.
AUM remained sequentially stable at INR835b. Given the high
leverage, we expect the company to continue to run down its balance sheet
until it raises fresh equity capital. Maintain Neutral, with TP of INR210.
As disbursements were negligible, AUM remained sequentially unchanged
at INR835b. The company did not sell down any loans in the quarter; hence,
upfront assignment income was nil v/s INR1.2b YoY.
While yield on loans was stable at 10.6%, cost of funds declined 30bp YoY,
leading to a similar improvement in spreads to 2.6%.
Cost of funds is likely
to further decline due to recent MCLR cuts by banks.
The GS3 ratio remained stable QoQ at 2.76%. While the company kept Stage
1 and 2 ECL provisions stable, it increased Stage 3 PCR from 36% to 40%
QoQ.
The share of moratorium granted to retail customers declined from 49% to
29% QoQ, while that for the overall book declined from 56% to 39% QoQ.
Collection efficiency stood at 96–97% during the quarter and was largely
stable each month. This comprises non-moratorium customers only.
Liquidity on the balance sheet stood at INR71b, i.e., 11% of borrowings.
The share of capital market borrowings (NCDs + CPs) declined to 22% from
32%. The company raised INR22.5b from NHB, the share of which now
stands at 10% of total borrowings.
Opex declined ~25% both QoQ and YoY. Management guided to 5–10%
YoY reduction in FY21.
Target INR130b retail lending disbursements in FY21. No fresh corporate
sanctions would be granted in FY21.
For its stressed IPL, the company sold one parcel of land and received
INR250m earnest money. The developer paid an additional INR250m in July
2020. The principal outstanding is now at INR690m from INR1.01b QoQ.
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
PNBHOUSI IN
167
35.4 / 0.5
748 / 146
-15/-53/-71
302
67.4
AUM stable; NIMs improve sequentially
Financials & Valuations (INR b)
Y/E March
2020 2021E
NII
18.1
17.5
PPP
20.6
16.9
PAT
6.5
7.5
EPS (INR)
38.4
44.7
EPS Gr. (%)
-46
16
BV/Sh. (INR)
476
509
Ratios
NIM (%)
2.6
2.6
C/I ratio (%)
21.1
23.4
RoAA (%)
0.8
1.0
RoE (%)
8.3
9.1
Valuations
P/E (x)
5.5
4.7
P/BV (x)
0.4
0.4
Div. Yield (%)
4.3
4.3
Shareholding pattern (%)
As On
Jun-20 Mar-20
Promoter
32.7
32.7
DII
4.9
6.3
FII
21.9
21.8
Others
40.6
39.2
FII Includes depository receipts
Gross Stage 3 stable; Moratorium rate declines
2022E
19.3
19.8
10.2
60.4
35
559
2.8
22.5
1.3
11.3
3.5
0.4
4.3
INR59b liquidity on the balance sheet; Opex declines sharply
Highlights from management commentary
Jun-19
32.7
7.8
21.4
38.1
Valuation and view
Over the past year, the key challenge for the company has been its high
leverage. This has resulted in the running down of the balance sheet. In the
current environment, this makes PNBHOUSI even more vulnerable to asset
quality shocks. While the recent improvement in NIM and reduction in opex is
encouraging, we wait and see the sustainability of the same. Maintain Neutral,
with TP of INR210 (0.4x FY22E BVPS).
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
20 January 2020
Research Analyst: Piran Engineer
(Piran.Engineer@MotilalOswal.com) |Alpesh
Mehta
(Alpesh.Mehta@MotilalOswal.com)
Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com) |
Divya Maheshwari
(Divya.Maheshwari@motilaloswal.com)
1