PNB Housing Finance shares spike over 10% to 10-week high after block deal

PNB Housing Finance, a registered housing finance company with the National Housing Bank (NHB), saw its shares jump 10.25% in today's intraday trade, hitting a 10-week high of ₹893.60 apiece, after 1.39 crore shares, or 5% of the total equity of the company, changed hands in a block deal window today.

The buyers and sellers, however, were not known immediately. On Tuesday, August 20, CNBC-TV18 reported that General Atlantic Singapore Fund FII Pte Ltd was to offload a 5.1% stake in PNB Housing Finance Ltd via a block deal.

Sources told CNBC-TV18 that the private equity firm planned to sell shares at a floor price of ₹775 each. This price reflects a 4.4% discount from the company's closing price of approximately ₹810 on Tuesday, which had decreased by 1.4% in trading. The 5.1% stake being sold amounts to a total deal size of about ₹1,032.7 crore.

As per data available on the Bombay Stock Exchange, General Atlantic held a 5.13% stake in the company, as of June 30, 2024.

Earlier this year, Asia Opportunities V (Mauritius) and General Atlantic Singapore Fund FII had together sold a cumulative 5.2% stake. Additionally, the US-based private equity firm Carlyle sold a 12.8% stake in PNB Housing Finance through an open market transaction for ₹2,578 crore.

June quarter earnings

For the June 2024 quarter, PNB Housing Finance reported a 25% increase in net profit, reaching ₹433 crore, compared to ₹347 crore in the same quarter of the previous year.

The company's total income rose to ₹1,832 crore from ₹1,708 crore in the corresponding period of the prior fiscal year, as stated in a regulatory filing. Interest income for the quarter increased to ₹1,739 crore, up from ₹1,667 crore in the previous year.

Net interest income grew by 4% to ₹651 crore for the first quarter ending June 2024. However, the net interest margin decreased to 3.65% from 3.86% in the same quarter last year. The gross non-performing assets (NPAs) declined to 3.76%, down by 1.3% from the previous year’s level.

Earlier in June, domestic brokerage IIFL Securities initiated coverage on the stock with a "buy" rating and a target price of ₹1,050. It said the company is set to double the affordable and higher yielding emerging prime loan book mix to 40% by FY27, aided by focused verticals with independent branches.

In addition to expanding its affordable and emerging segments, the company plans to increase its portfolio of non-housing loans and smaller-ticket prime housing loans, which is anticipated to enhance profitability.

However, the brokerage highlights that key risks include the interest rate cycle and the financial health of the promoter, Punjab National Bank, which owns a 28.13% stake at the end of the June quarter.

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