Motilal Oswal - PNB Housing Finance (PNBHOUSING) MOSL: PNB HOUSING FINANCE (Buy)-Disbursement growth tepid; Asset quality intact

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Motilal Oswal

MOSL: PNB HOUSING FINANCE (Buy)-Disbursement growth tepid; Asset quality intact

PNB Housing Finance: Disbursement growth tepid; Asset quality intact

(PNBHOUSI IN, Mkt Cap USD3.2b, CMP INR1304, TP INR1750, 34% Upside, Buy)

PNBHF’s 1QFY19 PAT grew robustly by 38% YoY to INR2.4b, driven by strong AUM growth, margin pressure and lower credit costs.
AUM grew 47% YoY/10% QoQ to INR686b. Repayment rate (annualized) was 24.6% in 1QFY19 v/s 29.7% in the year-ago period. However, disbursement growth of 25% YoY was the slowest in the past several quarters.
While spreads (calc.) declined 10bp YoY to 2.47%, margins shrank ~40bp YoY to 2.65% due to higher leverage. As a result, NII growth was 28% YoY v/s AUM growth of 47% YoY. Spreads are likely to remain under pressure, as the increase in home loan rates may not be able to match the rise in cost of funds, in our view.
C/I ratio (calculated) came in at 24.5% v/s average of 22-24% in the past few quarters. We believe that a sustained reduction in the C/I ratio is a must for an improvement in RoE.
Asset quality remained largely stable, with GNPL/NNPL ratios of 0.43%/0.33%.
Ind-AS impact: (a) Networth for FY18 was restated at INR66.06b under Ind-AS v/s INR63.06b under IGAAP. (b) PAT in FY18 was INR70m higher under Ind-AS. (c) Total ECL provisions on the BS stand at 52bp v/s 36bp in the year-ago period.

10/08/2018 10 EN

Underlying

PNB Housing Finance

PNB Housing Finance Limited (PNBHFL) is an India-based housing finance company. The Company provides housing loans to individuals and corporate bodies for construction, purchase, and repair and up gradation of houses. It also provides loans for commercial space, loan against property and loan for purchase of residential plots. It provides home loans, which include home purchase loans, home extension loans, home construction loans, home improvement loans, residential plot loans and loans for non-resident Indians (NRIs). The Company also provides non-home loans, which include commercial property loans, loan against property (LAP), loan for purchase of non-residential premises (NRP) and lease rental discounting (LRD). The Company also offers construction finance to the real estate developers. In addition, PNBHFL offers fixed deposit products for retail investors. The Company has around 38 branches supported by around 16 underwriting hubs.

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INE572E01012 National Stock Exchange of India India

Provider

Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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MOSL: PNB HOUSING FINANCE (Buy)-Disbursement growth tepid; Asset quality intact

MOSL: PNB HOUSING FINANCE (Neutral)-Spreads at historical lows; healthy improvement in asset quality in the Corporate book

MOSL: PNB HOUSING FINANCE (Neutral)-Still in consolidation mode

With a more favourable environment, PNB HOUSING FINANCE improves to Slightly Positive

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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