PNB Housing Finance shares surged on Wednesday after reporting steady Q1FY27 earnings, with the stock rising as much as 7% to hit a fresh 52-week high of ₹1,131.20 per share. The housing finance company delivered robust first-quarter results with net profit rising 4.5% year-on-year to ₹557 crore compared with ₹534 crore in the corresponding period last year, as reported by The Economic Times. The stock has gained 7% in the past week and 6% over the month, with a 15% jump on a year-to-date basis, reflecting strong investor confidence in the company's steady operational performance and healthy business growth across key metrics.
The company has launched a new micro-housing loan business targeting ₹100 crore AUM by the end of FY27, as announced by Managing Director & CEO Ajai Kumar Shukla. According to Mint, the lender expects the micro housing segment to offer higher yields of 14-15% compared with around 12% for affordable housing loans. The entry into micro housing is a natural extension of the company's affordable housing business, given the similarities in underwriting, distribution and operating capabilities. "The only thing is that we will go deeper into the market and there you will get maybe tier 4-5 cities, where we have the branches already placed. We see the opportunity to leverage those branches by way of offering or maybe acquiring those customers also," Shukla stated to Mint. The company will maintain strict underwriting standards, with Shukla emphasizing that "We will not compromise underwriting standards. Your valuation process, legal process, underwriting process and personal discussion process will remain intact."
The company is focusing more on emerging and affordable segments to improve spreads, with the affordable plus emerging ratio currently at 41% and expected to reach 45% by the end of this year. As per Mint, Managing Director & CEO Ajai Kumar Shukla stated that "We are focussing more on emerging and affordable. Currently, my affordable plus emerging ratio is 41%, which should by the end of this year be around 45%. So that will give us an edge in the spread." The company has also launched an emerging developer finance vertical aimed at small developers undertaking reconstruction or expansion of individual homes, particularly in markets such as New Delhi, Ahmedabad, Bengaluru and Hyderabad. These projects typically involve homeowners either selling their property to a developer or partnering with one to add additional floors while retaining part of the redeveloped building, with average ticket sizes of around ₹25 crore and turnaround periods of 18-20 months.
PNB Housing Finance demonstrated robust operational performance with loan assets expanding 15% year-on-year to ₹89,670 crore, while assets under management stood at ₹93,021 crore at the end of June, reflecting a 13% year-on-year rise. The company's retail loan book grew 16% to ₹89,178 crore and accounted for 99.5% of the total loan portfolio. Total income increased 9% annually to ₹2,265 crore from ₹2,082 crore a year earlier, indicating healthy growth in the lender's core lending business despite challenging operating conditions. Interest income increased 8% year-on-year to ₹2,138 crore from ₹1,979 crore a year earlier, with net interest income (NII) surging 6% YoY to ₹803 crore during the quarter, as reported by The Economic Times. Overall disbursements increased 18% from the previous year, despite one-time impact from changes in accounting for disbursement recognition.
The company's net interest margin (NIM) narrowed to 3.50% in the June quarter from 3.62% in the preceding quarter and 3.74% a year earlier, with overall yield on advances at 9.48%, up 1 basis point sequentially but below 9.99% a year ago. However, Managing Director & CEO Ajai Kumar Shukla expects margins to begin improving from September-October as loan spreads recover. "As far as NIM is concerned, we strongly believe that it has bottomed out now because whatever challenges were there in the market in terms of cost of fund, largely it is stabilised," Shukla stated. Cost of borrowing rose marginally to 7.36% in the June quarter from 7.35% in the preceding quarter but was 40 basis points lower than 7.76% a year earlier. Shukla expects improving banking system liquidity, helped in part by inflows under the Reserve Bank of India's special foreign currency deposit window, to reduce banks' funding costs, while market borrowings should also become cheaper as interest rates stabilize.
