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CEO resignation abrupt, but franchise fundamentals intact

New CEO appointment and asset quality trajectory will be the key monitorables

* PNB Housing (PNBHF), on 31st Jul’25, announced that its MD and CEO, Mr. Girish Kousgi, has decided to step down from his role effective 28th Oct’25 to pursue external career opportunities. While this announcement came as an abrupt surprise for stakeholders, Mr. Kousgi clarified that his decision was entirely personal and driven by career aspirations, and unrelated to the exit of the private equity investors from the company.

* Subsequently, on 2nd Aug’25, the Board appointed Mr. Jatul Anand (currently serving as Chief Credit and Collection Officer) as Executive Director. He will assume overall responsibility for the Prime and Emerging business segments, overseeing sales, credit, product, and collections. Additionally, Ms. Valli Sekar has been designated as Chief Business Officer (CBO) for the Affordable segment, with responsibility for sales, credit, product, and collections within that vertical. The Board shared that the NRC has initiated the process to identify a new CEO and will evaluate both internal and external candidates for the role.

* We believe Mr. Kousgi was beginning to lay a strong foundation and strategic roadmap for the company’s future growth through product mix realignment and healthy execution. Under his leadership, following initiatives were cheered: 1) Build-out of an affordable housing franchise which was able to scale faster than peers, 2) Strong improvement in asset quality and recoveries from the written-off pool and 3) NIM stability despite high competitive intensity. Perhaps, this explains the sharp stockprice reaction on his resignation.

* Since Mr. Sanjay Gupta (who was with the company for a decade), PNBHF will now be appointing its fourth MD&CEO (including an interim CEO) to succeed Mr. Kousgi (Refer Exhibit 1) and the Board will have to find a suitable successor with vintage and longevity to lead the franchise. Appointment of a new CEO (preferably from the industry) will be pivotal, as the company requires seasoned leadership with deep industry expertise to build on the ongoing transformation at PNBHF.

* While the Board has reaffirmed its commitment to the franchise’s growth and stability, the new CEO may either chart a new strategic course or build upon the strategy formulated by their predecessor. Given the current lack of clarity, we have kept our earnings estimates unchanged and will await further clarity on the CEO appointment.

* PNBHF’s stock price has corrected ~20% over the last two trading sessions, serving as a clear example of the ‘Key Man Risk” playing out loud for the investors. We believe that the franchise has its inherent strengths however, the Board will need to instill greater investor confidence regarding: 1) the robustness of asset quality and 2) its ability to identify a suitable successor. We reiterate our BUY rating with a TP of INR980 (based on 1.2x Mar’27E P/BV)

PNBHF turns a new leaf; appointment of a seasoned leader to be crucial

* PNBHF’s senior leadership team has played an important role in driving the company’s strategic transformation. Over the last 2-3 years, the company significantly scaled down its corporate loan book, exited the super-prime segment, and deliberately slowed growth in the prime segment due to margin pressures and intense competition from banks. Simultaneously, the organization shifted its focus toward the Emerging and Affordable housing segments, which offer better risk-adjusted returns and growth potential.

* The transformation led to a notable improvement in asset quality, driven by stronger underwriting practices and a more robust collections framework. Corporate GNPA has been NIL over the past few quarters, while retail asset quality continues to improve.

Valuation and view

* PNBHF has made considerable progress over the past few years, with improvements across asset quality, business mix, and overall operating performance. The company’s transformation—marked by its shifting focus toward emerging and affordable housing, exit from lower-margin segments like super-prime and riskier segments like corporate lending, and strengthening of internal controls and collection architecture—has laid a solid foundation for quality growth.

* We will closely track the progression of this leadership change and look for continuity in strategic priorities, particularly in retail expansion, asset quality maintenance, and execution in the affordable housing segment. A smooth transition with minimal disruption to the current trajectory will be key to regaining investor confidence.

* We have kept our EPS estimates unchanged (for now) as the fundamentals remain intact and the business continues to demonstrate operational strength. However, we will closely monitor developments around the CEO’s transition and its impact, if any, on strategic continuity and execution. Reiterate our BUY rating with a TP of INR980 (based on 1.2x Mar’27E P/BV).

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