PNB Housing Finance share price falls 1% post Q2 results but experts remain upbeat; here's what they say

PNB Housing Finance share price today: PNB Housing Finance share price fell 0.91 per cent to close at ₹711.75 on BSE on Wednesday, October 25, following the company's September quarter result. 

PNB Housing Finance share price hit its 52-week high of ₹784.40 on October 19 this year and its 52-week low of ₹340.68 on November 21 last year. From its 52-week low level, the stock has surged about 109 per cent.

PNB Housing Finance Q2 Results

PNB Housing Finance announced its July-September quarter results for fiscal 2023-24 (Q2FY24) on Monday, October 24, reporting a rise of 45.9 per cent in net profit at ₹383 crore, compared to ₹262.6 crore in the corresponding period last year.

The revenue from operations in the second quarter of the current fiscal stood at ₹1,777.8 crore, registering a growth of 5.5 per cent, compared to ₹1,684.4 crore in the year-ago period.

The non-banking finance company's (NBFC's) total income rose to ₹1,779.4 crore in the September quarter, compared to ₹1,683.43 crore in the same period of the last financial year, PNB Housing Finance Limited said in a regulatory filing.

Also Read: PNB Housing Finance Q2 Results: Net profit rises 45% to ₹383 crore, revenue up 5% YoY

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Brokerages upbeat

Brokerage firms expressed their positive views on the stock after the NBFC's September quarter earnings.

Brokerage firm Motilal Oswal Financial Services has upgraded the stock to a buy and raised the target price to ₹950, implying a 33 per cent upside potential.

"The equity capital raised through a rights issue has brought in the much-needed confidence capital, which could result in a rating upgrade from credit rating agencies. Upgrade to a buy with a revised target price of ₹950 (based on 1.5 times Mar’25E BVPS). A key risk is high competitive intensity, leading to a compression in NIM (net interest margin)," said Motilal Oswal.

"Our recommendation upgrade is predicated on (a) visibility of more than 15 per cent AUM (assets under management) CAGR from FY25 onward, (b) potential NIM expansion on the back of a decline in borrowing costs and a marginal rise in yields as affordable housing mix improves to form a respectable proportion of retail books, and (c) expansion in RoA (return on assets) aided by moderation in credit costs (as both retail and corporate segment stress now largely provided for) and gradual improvement in RoE (return on equity) as the leverage builds up on the balance sheet," said Motilal Oswal.

Another brokerage firm Nirmal Bang has maintained a buy call on the stock with a target price of ₹835, implying a 16 per cent upside potential.

Nirmal Bang believes that the company's new approach of focusing on salaried and affordable housing segments may aid growth. The brokerage firm has tweaked its estimates for FY24 and FY25, factoring in higher NIM, lower opex (operational expenditure and normalised credit costs from FY25E.

JM Financial maintained a buy call on the stock and raised the target price to ₹825 from ₹750 earlier.

"We like PNB Housing Finance’s reinvigorated strategy of focusing on prime+affordable segments and expect the stock to rerate driven by (i) healthy AUM growth led by the retail book, (ii) increasing proportion affordable housing offering higher yields, and (iii) meaningfully lower credit cost compared to past cycle trends. We value the lender at 1.3 times FY25E BV (book value) to arrive at our target price of ₹825," said JM Financial.

Among the global brokerage firms, Morgan Stanley has maintained an 'overweight' view on PNB Housing Finance with a target price of ₹880, reported CNBC-TV18. Morgan Stanley, as reported by CNBC-TV18, said the stock has re-rated sharply in the past year but there is more scope as risk perception abates, loan growth rises and funding terms improve.

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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.