PNB Housing Finance, promoted by Punjab National Bank, is in the spotlight as the company prepares to release its Q3 FY25 results. Investors and analysts are closely monitoring the performance of this prominent housing finance company, which specialises in loans for residential and commercial properties, including purchase, construction, renovation, and repairs.
The outcome of these results is expected to have significant implications for share market investment in this sector.
Robust profit growth and asset quality
In Q2 FY25, PNB Housing Finance reported an impressive 23% year-on-year rise in net profit, reaching ₹470 crore. This growth was attributed to an improvement in asset quality, with the gross non-performing assets (GNPA) ratio decreasing to 1.24% compared to 1.78% in the previous year and 1.35% in the prior quarter.
Such consistent progress in managing asset quality strengthens the company's appeal for share market investment, as it reflects stability and financial health.
Modest growth in net interest income
The company posted a 1.2% year-on-year increase in net interest income (NII) during the September quarter, reaching ₹669 crore. On a quarterly basis, NII rose by 2.7%, although the net interest margin (NIM) showed slight pressure, standing at 3.68%, compared to 3.95% in the same period last year.
Despite this, the marginal improvement in NIM from 3.65% in the previous quarter underscores the company’s efforts to maintain profitability amidst changing market dynamics.
Expansion in the affordable housing segment
PNB Housing Finance is aggressively expanding its affordable housing loan book under the 'Roshini' initiative. As of Q2 FY25, the company’s affordable loan book reached ₹3,000 crore, with plans to grow this to ₹5,000 crore by the end of FY25 and ₹15,000 crore by March 2027.
The government’s Pradhan Mantri Awas Yojana-Urban 2.0 (PMAY 2) and the company’s branch expansion strategy are expected to drive this growth. Such developments enhance its potential as a lucrative share market investment option.
Plans for loan against property and fundraising
Looking ahead, PNB Housing Finance plans to establish a new vertical dedicated to loans against property starting in the next financial year. To support its 17% loan book growth target, the company has approved raising USD 125 million through external commercial borrowings (ECBs).
These strategic moves are aimed at diversifying revenue streams and strengthening the company’s financial base, thereby adding more value for those considering share market investment in the housing finance sector.
Stock performance and financial metrics
PNB Housing Finance’s shares have gained nearly 7% over the past year. However, certain metrics highlight potential challenges. While the company reports consistent profits, it has not declared dividends, and its sales growth over the past five years stands at -1.28%.
Additionally, the return on equity (ROE) has been relatively low at 10.4% over the last three years, and promoter holdings have decreased by 4.46% during the same period. Investors must weigh these factors carefully when making share market investment decisions.
Stay informed: Evaluate your investment strategy
PNB Housing Finance’s stock is trading at ₹906 as of 10:57 AM on January 21, 2025, reflecting a 0.66% decrease. This recent movement adds an intriguing dimension to its performance amidst market anticipation.
As PNB Housing Finance releases its Q3 FY25 results, the company’s strategic focus on affordable housing, improved asset quality, and plans for future growth make it a compelling option for share market investment. However, potential investors should also consider the company’s financial challenges and market performance before making decisions.
For android only