PNB Housing Finance Ltd. reported strong growth this quarter. Net profit increased to Rs 217 Cr registering robust growth of 58% YoY & 4.5% sequentially.Net Interest Income registered a growth of 55% to Rs 411 crore from Rs 265 crore YoY.
NIMs & Disbursements:
NIM for the quarter came in at 3.01% higher by 2 Bps from 2.99% YoY. Company’s disbursements increased by 110% to Rs 9,276 crore during Q3 FY17-18 from Rs 4,417 crore during Q3 FY16-17. Disbursements towards housing loan accounted for 69.7% and non-housing loan at 30.3%. Disbursement for Q2 FY17-18 was Rs. 7,385 crore. Management is conservative while lending in construction finance, they are only doing business with prominent developers.
Deposits & Borrowings:
The Deposit portfolio grew by 22% to Rs 10,668 crore as on 31st Dec, 2017 from Rs. 8,760 crore as on 31st Dec, 2016. Cost of borrowing decreased by 115 bps to 7.49% vs. 8.64% YoY. Borrowings for this quarter were Rs.50751 cr vs. Rs.45072 cr QoQ. Borrowings portfolio was majorly funded by NCDs (43.2%), Deposits (21%), Commercial paper (17.3%).
Gross Non-Performing Assets (NPA) stood at 0.42% of the Loan Assets as on 31st Dec, 2017 against 0.37% as on 31st Dec, 2016. Net NPA stood at 0.33% of the Loan Assets as on 31st Dec, 2017 against 0.27% as on 31st Dec, 2016. GNPA & NNPA inched a bit with increased provisioning for standard assets.
Company has added 7 new branches taking the total to 80 and company also services the customers through 34 outreach locations. The Company will continue to grow on the back of branch network expansion. It has plans of opening 23 branches in FY18 out of which 17 branches have already been opened in 9MFY18. Cost to income ratio for the company decreased to 18.32%.
Valuation: We have pegged a multiple of 3.5(x) to FY 19E ABV & arrived at a fair value of Rs 1526 per share. At CMP of Rs 1381 the stock is available at its FY 19E P/ABV of 3.2(x). We have “HOLD” rating on the stock.
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