27 January 2021
3QFY21 Results Update | Sector: Financials
PNB Housing Finance
Estimate change
TP change
Rating change
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
59.4 / 0.8
489 / 146
-1/39/-38
193
67.4
CMP: INR353
TP: INR400 (+13%)
Neutral
Stable operating performance; sharp spike in proforma GNPL
PNBHOUSI reported a 3QFY21 PAT of INR2.3b (flat YoY; 13% beat). The beat
was driven by stronger PPOP (13% above our estimate). Opex fell ~26%/7%
YoY/ QoQ. Credit cost stood at INR2.6b v/s our estimate of INR2.3b.
In 9MFY21, PPOP/PAT fell 6%/10% YoY to INR15.3b/INR8b.
Disbursements remain muted. While they were up ~30% sequentially at
INR32b, they were largely flat on a YoY basis. Note that the base itself was
weak.
Consequently, AUM declined 4% QoQ/10% YoY to INR77b.
The company commenced sell down of loans after two quarters, resulting in
upfront assignment income of INR352m.
Calculated spreads declined ~50bp QoQ from a higher base to 3%. 2QFY21
had a large impact of income from securitized loans. The company is able
to incrementally raise funds at 6.7% and is confident of maintaining
spreads in the guided range of 2.1-2.3%.
The reported GS3 ratio was stable QoQ at 2.6%. However, proforma GNPL is
up ~200bp QoQ to 4.47%. Around 1.25% of the loan book (INR8b) is likely to
be restructured.
It increased its ECL provisions across all buckets.
Stage 1 and 2 PCR
increased 40bp to 2.3%, while Stage 3 PCR increased ~300bp to 47%. Note
that PNBHOUSI’s Stage 1 and 2 PCR is among the best in the industry.
The company resolved some small corporate accounts, while the resolution
for some large accounts is underway (refer Exhibit 1). Around
62% of the
corporate book is current (i.e. 0dpd). It has reduced its exposure to its top
20 developers by 7% over the past three quarters.
Received restructuring requests of INR8b (1.25% of loans), of which
retail/corporate is INR6.6b/INR1.46b.
SWAMIH has identified 12 projects of PNBHOUSI worth INR12b that could
go in for resolution.
AUM down 10% YoY; incremental CoF sub-7%
Financials & Valuations (INR b)
Y/E March
NII
PPP
PAT
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
Ratios
NIM (%)
C/I ratio (%)
RoAA (%)
RoE (%)
Valuations
P/E (x)
P/BV (x)
Div. Yield (%)
2020
18.1
20.6
6.5
38.4
-46
476
2.6
21.1
0.8
8.3
9.2
0.7
2.5
2021E
20.6
20.6
10.6
63.0
64
523
3.2
17.1
1.4
12.6
5.6
0.7
3.6
2022E
21.4
22.2
11.9
70.5
12
581
3.3
17.9
1.5
12.8
5.0
0.6
3.0
Proforma GNPL at 4.5%; Stage 1, 2 provisions at 2.3%
Shareholding pattern (%)
As On
Dec-20 Sep-20
Promoter
32.7
32.7
DII
3.5
3.6
FII
24.6
24.0
Others
39.3
39.8
FII Includes depository receipts
Dec-19
32.7
6.6
23.1
37.6
Highlights from the management commentary
Valuation and view
Over the past year, the key challenge for the company, apart from COVID-19,
has been its high leverage. The management has consciously slowed down on
loan growth and focused on higher down-selling to address this issue. Leverage
has now fallen to comfortable levels of ~7x. From FY22 onwards, the company
would be in a position to grow its loan book by 10-12% YoY. Current spreads of
~3% are unsustainable and should revert to normalized levels of 2%. The asset
quality picture remains uncertain. We increase our FY22E EPS estimates by 6%
to factor in lower opex and slightly lower provisions. The company should
deliver 13-14% RoE in FY22E/FY23E. Maintain Neutral with a TP of INR400/share
(0.6x FY23E BVPS).
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)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
20 January 2020
1
 Motilal Oswal Financial Services
PNB Housing Finance
Quarterly performance
1Q
19,794
15,127
4,667
10.1
2,532
7,199
31.2
1,417
9.6
5,782
37.9
1,642
4,140
1,296
2,845
11.2
10.84
8.31
2.53
3.14
19.7
0.88
31.3
759
18.8
883
28.8
722
19.5
105.1
14.0
9.2
6,454
0.85
5,088
0.67
21.2
FY20
2Q
3Q
20,159 18,904
15,213 14,610
4,946 4,293
29.1
21.3
2,145 1,844
7,091 6,138
22.4
-8.1
1,315 1,347
-7.5 -13.9
5,776 4,790
32.1
-6.4
1,516 1,808
4,260 2,983
592
612
3,668 2,370
45.0 -21.8
10.95
8.34
2.61
3.19
18.5
0.81
13.9
744
11.3
895
21.8
715
12.3
104.1
16.9
8.9
10.74
8.21
2.53
2.98
21.9
1.01
20.5
691
-2.2
863
8.2
706
2.0
98.0
19.9
8.5
4Q
1Q
18,026 18,015
13,800 13,635
4,226 4,380
-9.2
-6.2
1,493
708
5,719 5,088
-20.6 -29.3
1,443 1,042
-12.8 -26.4
4,276 4,046
-23.0 -30.0
7,548
751
-3,272 3,295
-852
723
-2,421 2,572
-163.7
-9.6
10.26
8.03
2.23
2.61
25.2
4.42
26.0
676
-8.7
833
-1.6
682
-5.7
99.1
18.9
8.5
10.32
8.13
2.19
2.66
20.5
0.44
21.9
680
-10.4
835
-5.5
673
-6.8
101.1
18.5
8.2
Interest Income
Interest Expenses
Net Interest Income
YoY Growth (%)
Other income
Total Income
YoY Growth (%)
Operating Expenses
YoY Growth (%)
Operating Profit
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
Profit after tax
YoY Growth (%)
Key Operating Parameters (%)
Rep. Yield on loans
Rep. Cost of funds
Spreads
Net Interest Margin
Cost-to-Income Ratio
Credit Cost
Tax Rate
Balance Sheet parameters
Loans (INR b)
Change YoY (%)
AUM (INR b)
Change YoY (%)
Borrowings (Ex-Assignment) (INR b)
Change YoY (%)
Loans/Borrowings (%)
Off BS loans/AUM (%)
Debt/Equity (x)
Asset Quality Parameters (%)
GS 3 (INR m)
Gross Stage 3 (% on loans)
NS 3 (INR m)
Net Stage 3 (% on loans)
PCR (%)
E: MOFSL estimates
FY21
FY20
2Q
3Q
4QE
19,603 17,579 16,538 76,882 71,735
13,397 12,462 11,684 58,750 51,178
6,206 5,116 4,854 18,133 20,557
25.5
19.2
14.9
11.5
13.4
612 1,385 1,533 8,013 4,238
6,818 6,501 6,387 26,146 24,795
-3.8
5.9
11.7
3.9
-5.2
1,067
996 1,137 5,522 4,243
-18.9 -26.0 -21.2
-7.0 -23.2
5,751 5,505 5,250 20,624 20,552
-0.4
14.9
22.8
7.2
-0.3
1,796 2,567 2,025 12,514 7,138
3,956 2,938 3,225 8,110 13,414
823
614
657 1,648 2,817
3,133 2,324 2,568 6,462 10,597
-14.6
-2.0 -206.1 -45.8
64.0
11.30
8.01
3.29
3.52
15.7
1.06
20.8
670
-10.0
812
-9.2
662
-7.3
101.1
17.6
7.8
10.62
7.72
2.90
3.18
15.3
1.56
20.9
646
-6.6
777
-10.0
641
-9.1
100.7
16.9
7.9
(INR m)
v/s
FY21 3QFY21E
estimate
18,035
13,196
4,839
12.7
1,265
6,104
-0.5
1,212
-10.0
4,892
2.1
2,250
2,642
581
2,060
-13.1
-3
-6
6
9
7
-18
13
14
11
6
13
21.1
1.78
20.3
666
-10.3
833
-1.6
677
-5.7
98.4
20.1
8.5
17.1
1.10
21.0
632
-5.2
770
-7.6
632
-6.8
100.0
18.0
7.2
19.9
0.65
21.5
736
4.1
904
13.3
707
2.2
104.2
18.5
8.7
209 BPS
35.93
-97 BPS
-6.12
-4.50
-0.20
6,246 12,099 18,582 18,770 17,340 17,050
0.84
1.75
2.75
2.76
2.59
2.64
4,833 9,956 11,825 11,358 9,775 9,106
0.65
1.44
1.75
1.67
1.46
1.41
22.6
17.7
36.4
39.5
43.6
46.6
18,582 18,582
2.75
2.75
11,825 11,825
1.75
1.75
36.4
36.4
Highlights from the management commentary
Business updates
Corporate book yields rose by 100-125bp around 2-3 quarters back.
The management targets RoA of 1.4-1.6%.
Retail home loan yields – On-book: 9.82%; incremental: 9.09%. The incremental
yield on home loans is 45-60bp higher than that of banks and large HFCs. It has
reduced its benchmark rate by 65bp in the past nine months.
Asset quality
SWAMIH has identified 12 projects of PNBHOUSI worth INR12b that could go
in for resolution. The company has identified three assets worth INR3.5b
2
27 January 2021
 Motilal Oswal Financial Services
PNB Housing Finance
where the management is actively looking for a resolution. Note that these
projects are already classified as NPL.
Received restructuring requests of INR8b (1.25% of loans), of which
retail/corporate is INR6.6b/INR1.46b.
Wrote off INR340m in 9MFY21.
Funding
Liquidity on the Balance Sheet, including undrawn credit lines, stands at INR70-
80b. The management looks to trim it in coming months.
Incremental CoF is 6.71% in 3QFY21 and 6.91% in 9MFY21.
Benefit of INR500m in 3QFY21 was due to lower MCLR on the assigned book.
Others
Disbursed INR1.3b under ECLGS.
Was able to borrow from banks at a rate linked to external benchmarks.
Premium to repo rate is 100-150bp.
Exhibit 1: Status of stressed accounts
Company
IREO Pvt
Pate Developers
Others
Supertech
Ornate
Radius
Current status
Account resolved, no longer an NPA from Sep’20
Account resolved, MoU executed with Pune-based developer who
has paid 10% earnest money
Three accounts closed with nil credit losses
The company has started construction of launched part of the
project. Auction proceedings initiated for sale of un-launched part of
the project land to pare down debt
Admitted to NCLT. RP appointed to resolve queries of developers.
Received EoI from various developers
Started legal proceedings under SARFAESI Act. Working with co-
lender on resolution
The order passed for taking over physical possession of the site. JDA
with a large developer in advanced stages. The incoming developer
has completed diligence and has submitted NOC to PNBHOUSI for
project takeover
Location
Gurgaon
Pune
Amount (INR b)
0.20
Gurgaon
Mumbai
Mumbai
2.44
1.81
2.59
Vipul
Gurgaon
3.56
Source: MOFSL, Company
Key exhibits
Exhibit 2: AUM declines sequentially
AUM (INR b)
38
36
29
Exhibit 3: Loan book fell 7% YoY
YoY Growth (%)
28
30
19
11
Loans (INR b)
YoY Growth (%)
22
8
-2
-5
-9
-10
-2
-9
-10
-10
-7
Source: MOFSL, Company
Source: MOFSL, Company
27 January 2021
3
 Motilal Oswal Financial Services
PNB Housing Finance
Exhibit 4: Loan mix stable QoQ (%)
Home loan
8
5
16
13
57
8
4
17
13
58
8
3
18
CF
LAP
LRD
Others
Exhibit 5: Share of salaried customers stays unchanged (%)
Salaried
7
1
22
12
57
22
35
21
35
20
36
Self Employed
Corporates
18
38
18
38
17
39
8
3
18
12
59
8
2
19
12
59
8
2
20
12
58
8
2
20
13
58
8
1
21
13
57
19
36
18
37
18
37
13
59
43
44
44
45
45
45
44
44
44
Source: MOFSL, Company
Source: MOFSL, Company, Corporates include LRD, CF, Corp. TL
Exhibit 6: Share of capital market borrowings falls (%)
NCD
7
17
6
17
11
30
CP
Deposits
8
21
6
18
8
25
17
8
22
6
20
5
22
ECB
20
7
23
6
19
3
22
TL
NHB
19
10
23
7
20
1
20
Assignment
18
11
24
7
21
3
17
Exhibit 7: Disbursements remain muted
Disbursement (INR b)
0.7
-2.0
-21.8
-40.9
-65.8 -67.0
-90.9
Growth (%)
0.3
13
8
18
6
17
10
28
19
7
24
7
20
1
23
17
11
25
8
21
1
17
-50.8
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 8: Spreads decline by ~40bp QoQ
Yield on loans (%)
10.3
8.5
8.1
10.5
10.6
8.4
10.7
8.5
10.5
8.2
Cost of funds (%)
11.6
10.7
10.5 10.6
8.0
Exhibit 9: Expense ratio stable
C/I Ratio (%)
0.8
0.8
0.7
Opex/Avg AUM (%)
0.6
0.7
0.5
0.5
0.5
0.6
8.0
8.1
7.6
Source: MOFSL, Company, Calculated
Source: MOFSL, Company, Calculated
Exhibit 10: Resumes loan sell down in 3QFY21
Assignment Income (INR m)
Exhibit 11: Credit cost trend
Credit Cost (%)
3.6
0.4
0.8
0.0
0.7
0.8
0.4
1.3
0.9
Source: MOFSL, Company
Source: MOFSL, Company
27 January 2021
4
 Motilal Oswal Financial Services
PNB Housing Finance
Exhibit 12: Stage 3 provisions increases…
ECL Prov S1&2 (%)
ECL Prov S 3 (%)
36.2
22.7
39.7
43.9
46.8
Exhibit 13: …leading to improvement in ECL provisioning
Total ECL Prov (%)
2.6
1.3
2.7
3.0
3.5
20.9
23.2
28.4
22.3
0.6
0.6
0.8
1.0
0.5
0.5
0.6
0.8
0.8
1.7
1.7
1.9
2.3
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 14: Asset quality stable
GS3 (INR b)
GS3 (%)
2.7
2.8
2.6
2.6
Exhibit 15: Net Stage 3 at 1.4% of loans
NS3 (INR b)
1.4
NS3 (%)
1.8
1.7
1.5
1.4
3.4
0.5
3.5
0.8
0.5
6.5
6.2
0.8
1.8
2.6
0.4
12.1
18.6
18.8
17.4
17.1
2.8
0.7
0.4
5.0
4.9
8.7
11.8
11.3
9.7
9.1
0.7
Source: MOFSL, Company, proforma GNPA at 4.47%
Source: MOFSL, Company
Exhibit 16: Upgrade our FY22E EPS estimate by 6% to factor in lower opex and credit costs
INR b
NII
Other Income
Total Income
Operating Expenses
Operating Profit
Provisions
PBT
Tax
PAT
Loan book
NIM (%)
Spreads (%)
ROAA (%)
RoAE (%)
FY21E
20.0
4.4
24.4
4.8
19.5
7.2
12.3
2.7
9.6
650
3.0
2.7
1.2
11.4
Old estimate
FY22E
20.9
6.3
27.2
5.4
21.8
7.4
14.4
3.2
11.2
695
3.1
2.6
1.4
12.2
FY23E
22.3
7.5
29.8
6.0
23.8
4.4
19.4
4.3
15.1
782
3.0
2.4
1.7
14.7
New estimate
FY21E
FY22E
FY23E
20.6
21.4
21.7
4.2
5.6
6.5
24.8
27.0
28.3
4.2
4.8
5.4
20.6
22.2
22.9
7.1
7.2
4.2
13.4
15.0
18.7
2.8
3.2
3.9
10.6
11.9
14.7
632
670
742
3.2
3.3
3.1
2.8
2.7
2.3
1.4
1.5
1.8
12.6
12.8
14.2
FY21E
3.0
-3.6
1.8
-12.4
5.3
-1.4
9.3
4.4
10.7
-2.9
Change (%)
FY22E
2.6
-11.4
-0.7
-11.0
1.9
-3.2
4.5
-0.2
5.9
-3.5
FY23E
-2.7
-12.8
-5.2
-11.0
-3.7
-4.4
-3.6
-8.0
-2.4
-5.1
Source: MOFSL, Company
27 January 2021
5
 Motilal Oswal Financial Services
PNB Housing Finance
Exhibit 17: One-year forward P/B
P/B (x)
Min (x)
5.2
3.9
2.6
1.3
0.8
3.9
3.0
1.9
0.7
Avg (x)
+1SD
Max (x)
-1SD
Exhibit 18: One-year forward P/E
P/E (x)
Min (x)
Avg (x)
+1SD
23.5
21
8.2
5.7
2.9
1
15.9
31
Max (x)
-1SD
28.7
11
0.3
0
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 19: Valuation matrix
66
Rating
FY23E
HFCs
HDFC*
Buy
LICHF
Buy
PNBHOUSI
Neutral
AAVAS
Neutral
CANF
Buy
REPCO
Buy
Vehicle Finance
SHTF
Buy
MMFS
Buy
CIFC
Buy
Diversified
BAF
Neutral
SCUF
Buy
LTFH
Buy
INDOSTAR
Neutral
MASFIN
Buy
Gold Finance
MUTH
Buy
MGFL
Buy
Wholesale
PIEL
Buy
ABCAP
Buy
Capital Markets
IIFL Wealth
Buy
ISEC
Buy
CMP M-cap
P/E (x)
P/BV (x)
RoA (%)
RoE (%)
(INR) (USD b) FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E
2,467
395
353
1,850
479
248
1,151
172
411
4,845
1,002
88
312
882
1,133
155
1,421
80
1,016
413
60.2
2.9
0.8
1.9
0.9
0.2
3.7
1.5
4.7
40.3
0.9
2.5
0.5
0.6
6.5
1.9
4.3
2.8
1.2
2.0
24.5
6.6
6.2
52.3
14.4
5.3
11.3
23.7
20.2
66.2
7.8
18.7
93.1
30.8
12.8
8.0
12.9
8.9
26.0
13.8
18.2
6.1
5.3
42.6
13.5
5.0
9.3
18.5
16.9
33.0
6.0
8.1
25.5
25.7
10.8
6.5
11.1
8.2
20.4
13.6
13.4
5.8
3.9
33.3
12.0
4.5
8.0
11.9
13.6
26.0
4.8
5.8
17.0
21.6
9.2
5.5
9.6
5.8
16.4
12.7
2.7
1.0
0.7
6.1
2.5
0.8
1.3
1.4
3.5
8.0
0.8
1.2
1.0
4.3
3.2
1.8
1.1
0.9
2.9
8.9
2.2
0.9
0.6
5.3
2.1
0.7
1.2
1.3
2.9
6.6
0.7
1.0
0.9
3.9
2.6
1.5
1.0
0.7
2.7
7.4
1.6
0.8
0.5
4.6
1.8
0.6
1.0
1.2
2.4
5.3
0.6
0.9
0.9
3.4
2.1
1.2
0.9
0.5
2.6
6.3
1.8
1.3
1.2
3.3
2.0
2.4
2.2
1.2
2.4
2.6
2.8
0.8
0.4
3.5
6.6
5.3
0.0
1.6
21.2
0.0
1.9
1.3
1.4
3.4
2.0
2.3
2.5
1.4
2.7
4.8
3.6
1.9
1.4
4.1
7.0
5.9
0.0
1.4
21.7
0.0
1.9
1.3
1.7
3.8
2.1
2.4
2.7
2.0
3.1
5.0
4.3
2.4
2.3
4.2
7.2
6.1
0.0
1.5
22.8
0.0
12.5
15.8
11.4
12.4
18.7
15.2
12.9
6.7
18.6
12.8
11.2
6.4
1.3
14.9
27.3
25.5
8.4
10.6
11.2
71.3
12.6
15.1
12.2
13.4
17.0
14.0
13.4
7.2
18.8
21.9
12.9
13.5
3.8
15.9
26.2
25.3
9.4
8.7
13.8
59.3
12.9
14.1
14.7
14.8
16.3
13.7
13.8
10.5
19.6
22.7
14.5
16.5
5.4
16.7
25.0
24.1
10.0
8.9
16.3
53.8
*Adjusted for investments in subsidiaries
27 January 2021
6
 Motilal Oswal Financial Services
PNB Housing Finance
Financials and valuations
Income Statement
Y/E March
Interest Income
Interest Expended
Net Interest Income
Change (%)
Other Operating Income
Net Income
Change (%)
Operating Expenses
Operating Income
Change (%)
Provisions/write-offs
Reported PBT
Tax
Tax Rate (%)
Reported PAT
Change (%)
Proposed Dividend
Balance Sheet
Y/E March
Capital
Reserves and Surplus
Net Worth
Borrowings
Change (%)
Other liabilities
Total Liabilities
Loans
Change (%)
Investments
Change (%)
Net Fixed Assets
Other assets
Total Assets
E: MOFSL estimates
FY16
25,461
18,603
6,858
68.9
1,534
8,393
62.8
2,521
5,872
76.6
832
5,040
1,766
35.0
3,273
68.7
486
FY17
36,401
26,437
9,964
45.3
2,678
12,642
50.6
3,573
9,069
54.5
1,029
8,040
2,803
34.9
5,237
60.0
1,196
FY18
50,467
35,366
15,101
51.6
4,426
19,528
54.5
4,416
15,112
66.6
2,766
12,346
3,934
31.9
8,412
60.6
1,799
FY19
67,929
51,664
16,265
7.7
8,904
25,169
28.9
5,935
19,234
27.3
1,890
17,344
5,429
31.3
11,915
41.7
1,809
FY20
76,882
58,750
18,133
11.5
8,013
26,146
3.9
5,522
20,624
7.2
12,514
8,110
1,648
20.3
6,462
-45.8
1,816
FY21E
71,735
51,178
20,557
13.4
4,238
24,795
-5.2
4,243
20,552
-0.3
7,138
13,414
2,817
21.0
10,597
64.0
2,543
FY22E
67,975
46,535
21,440
4.3
5,560
26,999
8.9
4,830
22,169
7.9
7,160
15,010
3,152
21.0
11,858
11.9
2,134
(INR m)
FY23E
70,272
48,550
21,722
1.3
6,540
28,262
4.7
5,364
22,899
3.3
4,238
18,661
3,919
21
14,742
24.3
2,654
(INR m)
FY23E
1,682
108,161
109,843
705,229
9.6
42,550
857,623
742,347
10.8
27,628
10.0
1,567
86,081
857,623
FY16
1,269
20,190
21,459
260,137
57.8
14,809
296,405
271,813
61.8
16,223
2.3
622
7,747
296,405
FY17
1,656
56,340
57,996
353,207
35.8
14,974
426,177
387,347
42.5
33,236
104.9
604
4,990
426,177
FY18
1,666
64,008
65,673
537,767
52.3
26,704
630,145
571,648
47.6
24,130
-27.4
858
33,509
630,145
FY19
1,675
73,764
75,439
718,589
33.6
44,662
838,690
742,879
30.0
45,607
89.0
1,083
49,122
838,690
FY20
1,682
78,296
79,978
677,351
-5.7
31,969
789,297
666,280
-10.3
20,757
-54.5
1,353
100,906
789,297
FY21E
1,682
86,349
88,031
631,555
-6.8
35,165
754,752
631,555
-5.2
22,833
10.0
1,421
98,943
754,752
FY22E
1,682
96,073
97,755
643,388
1.9
38,682
779,825
670,196
6.1
25,116
10.0
1,492
83,020
779,825
27 January 2021
7
 Motilal Oswal Financial Services
PNB Housing Finance
Financials and valuations
Ratios
Y/E March
Spreads Analysis (%)
Avg. yield on loans
Avg. cost of funds
Interest Spread
NIM on loans
Profitability Ratios (%)
RoE
RoA
Int. Expended/Int. Earned
Other Inc./Net Income
Efficiency Ratios (%)
Op. Exps./Net Income
Empl. Cost/Op. Exps.
Asset Quality (INR m)
Gross NPA
GNPA ratio
Net NPA
NNPA ratio
Valuation
Book Value (INR)
BVPS Growth YoY
Price-to-BV (x)
EPS (INR)
EPS Growth YoY
Price-to-Earnings (x)
Dividend per share (INR)
Dividend yield (%)
E: MOFSL estimates
FY16
11.2
8.8
2.4
3.1
FY17
10.6
8.6
2.0
3.0
FY18
10.2
7.9
2.3
3.1
FY19
10.1
8.2
1.9
2.5
FY20
10.6
8.4
2.1
2.6
FY21E
10.7
7.8
2.8
3.2
FY22E
10.0
7.3
2.7
3.3
(%)
FY23E
9.5
7.2
2.4
3.1
17.6
1.3
73.1
18.3
13.2
1.4
72.6
21.2
13.6
1.6
70.1
22.7
16.9
1.6
76.1
35.4
8.3
0.8
76.4
30.6
12.6
1.4
71.3
17.1
12.8
1.5
68.5
20.6
14.2
1.8
69.1
23.1
30.0
29.9
28.3
28.3
22.6
32.6
23.6
51.2
21.1
42.2
17.1
49.4
17.9
48.6
19.0
49.1
598
0.2
381
0.1
FY16
169.1
11.2
25.8
38.0
3.4
858
0.2
590
0.2
FY17
350.1
107.1
31.6
22.6
6.0
1,861
0.3
1,438
0.3
FY18
394.2
12.6
50.5
59.7
9.0
3,549
0.5
2,784
0.4
FY19
450.5
14.3
71.1
40.9
9.0
18,562
2.8
11,838
1.8
FY20
475.5
5.6
0.7
38.4
-46.0
9.2
9.0
2.5
31,888
5.0
20,727
3.3
FY21E
523.4
10.1
0.7
63.0
64.0
5.6
12.6
3.6
36,940
5.4
24,011
3.6
FY22E
581.2
11.0
0.6
70.5
11.9
5.0
10.6
3.0
40,291
5.3
26,189
3.5
FY23E
653.1
12.4
0.5
87.7
24.3
4.0
13.1
3.7
27 January 2021
8
 Motilal Oswal Financial Services
PNB Housing Finance
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
27 January 2021
9
 Motilal Oswal Financial Services
PNB Housing Finance
********************************************************************************************************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
27 January 2021
10