PNB Housing Finance shares plunge 8% amid block deal

Shares of PNB Housing Finance plummeted over 8% in opening trade on Wednesday, driven by strong volume amid block deal. The names of buyers and sellers were not known immediately but a report suggests that two shareholders of PNB Housing Finance - Asia Opportunities V Mauritius and General Atlantic Singapore Fund - were looking to offload shares worth ₹500 crore via block deal.

As of March 31, 2024, Asia Opportunities V Mauritius held a 9.88% stake in the company, while General Atlantic Singapore Fund owned 9.82% shares in the mortgage lender.

As per the report, the block deal is expected to see a transaction of 69.6 lakh shares, or 2.68% stake in the company, at a floor price of ₹717 per share, a discount of 9% to Tuesday’s closing price on the BSE.

Extending losses for the second day, PNB Housing Finance shares opened lower at ₹745, down 5.5% against the previous closing price of ₹788.60 on the BSE. In the early trade, the state-owned housing finance stock declined as much as 8.1% to ₹724.55, while the market capitalisation dropped to ₹18,910 crore. The counter witnessed strong volume as 1.37 crore shares changed hands over the counter compared with a two-week average of 0.2 lakh stocks.

The PNB Housing Finance share price touched its 52-week high of ₹913.95 on January 25, 2024, and a 52-week low of ₹476.45 on May 30, 2023. In the last one year, the stock has given 53% return to its shareholders, while it declined nearly 8% in six months and 8.5% in a month.

On May 27, CRISIL Ratings upgraded the company’s long-term debt instruments and bank facilities to ‘CRISIL AA+’ from ‘CRISIL AA’, with stable outlook and rating on the short-term bank facilities and debt instruments reaffirmed at ‘CRISIL A1+’.

The rating agency said that the action reflects improving profitability and asset quality metrics. “Strong capitalisation and increased granularity with most of the legacy portfolio having been provided for, also supports the overall credit profile of the company,” it said in a report.

The agency said that the company’s ability to maintain profitability, while further scaling up operations will remain a monitorable.

PNB Housing’s profitability improved with a return on managed assets (ROMA) of 2% in fiscal 2024 as against 1.4% in fiscal 2023 and 1.1% in fiscal 2022, supported by improvement in credit costs. For the full fiscal year 2023-24, the housing financier posted a 44% growth in its net profit at ₹1,508 crore, from ₹1,046 crore in the previous fiscal year. Total income rose to ₹7,024 crore as against ₹6,492 crore reported in FY23. The company’s net interest margin (NIM) was stable at around 4%. However, given the expansion into affordable and emerging segments, operating expenses witnessed a slight uptick and stood at 0.9% in fiscal 2024 as compared to 0.8% and 0.6%, in fiscals 2023 and 2022, respectively.

In FY24, assets under management (AUMs) grew by 7% to ₹71,243 crore from ₹66,617 crore a year earlier and ₹66,983 Crore as on March 31, 2022. Loan assets grew by 10% to ₹65,358 crore in FY24 from ₹59,273 crore in fiscal 2023. This is after reporting a degrowth in AUM in fiscals 2020 to 2023, as the management had slowed down disbursement and encouraged accelerated prepayments (in wholesale book).

As per CRISIL report, disbursements also gained momentum at ₹17,583 crore in fiscal 2024; highest since fiscal 2019. The AUM growth in fiscal 2024 was driven by 10% growth in retail book while the corporate book continues to run down (3% of the overall AUM as on March 31, 2024). Going forward, retail loans will remain the key growth driver, the rating agency said. 

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