Shares of PNB Housing Finance Ltd. are trading with gains of 11% after the company reported a strong March quarter performance, with management commentary pointing to sustained growth momentum. According to reports from CNBC TV18, the company achieved robust business traction, with retail disbursements hitting a record high during the quarter. Asset quality also improved further, with gross NPAs falling below the 1% mark, reinforcing balance sheet strength. The latest Q4 FY26 results show even stronger performance, with net profit surging 19% YoY to ₹656 crore, driven by record retail loan disbursements of ₹9,020 crore - a 32% YoY surge. The stock climbed significantly, reaching an intraday high of ₹972.75, up 7.3% on the BSE, outperforming the broader market where BSE Sensex rose only 0.45% during the same session.
The company's strategic pivot towards retail segments has yielded significant results, with retail loan assets expanding 16% YoY to ₹86,946 crore in Q4 FY26. As reported by HomeStocksNews, this growth is primarily driven by the affordable and emerging housing loan segments, which offer higher yields compared to prime home loans. The company has been actively reshaping its business strategy, doubling its branch network to 356 by March 2025 and planning to add 50-60 branches annually to reach 500 by FY27. Management expects retail loan growth of 17%-18% for FY26, focusing on affordable and emerging markets. The company also restarted corporate lending after a four-year break, with ₹335 crore disbursed to builders. Over the next two to three years, the share of affordable and emerging segments in the loan mix is targeted to rise to 50%, from around 40% currently.
Despite strong revenue growth, profitability metrics face challenges with net interest margin (NIM) narrowing slightly to 3.69% in Q4 FY26 from 3.75% a year earlier, even as borrowing costs decreased. As reported by HomeStocksNews, operating expenses rose 10.5% quarter-on-quarter in Q3 FY26, partly due to a one-time cost for implementing new labor codes. Analysts from Motilal Oswal pointed out that higher operating expenses and lower fee income impacted profits, suggesting that stable NIMs depend on future lending yields. The company's assets under management grew 13% to ₹90,921 crore, with retail loans making up the majority. Growth is expected to be led by the affordable housing segment, followed by emerging and prime categories, with yields having largely bottomed out and should start improving from the first quarter of the new financial year.
The company's Q4 FY26 performance reflects improved operational efficiency, with Return on Asset (ROA) for FY26 at 2.66% and Net Interest Margin (NIM) at 3.69% in Q4 FY26. Asset quality saw further improvement, with Gross NPA ratio declining to 0.93% as of March 31, 2026, as reported by HomeStocksNews. The spread in Q4 FY26 stood at 2.12%, while the company has been focusing on collections and underwriting to maintain low NPA levels. The company also proposed a final dividend of ₹8 per share for FY26, indicating confidence in sustained cash generation. Management expects credit costs to remain negative, supported by strong recoveries.
Within the housing finance space, valuations remain varied across different players. According to CNBC TV18 analysis, LIC Housing Finance Ltd. is seen as the cheapest among peers, trading at around 0.78x book and 5.6x earnings, with steady return ratios of 16% ROE and 1.8% ROA. PNB Housing Finance has a trailing twelve-month P/E ratio of 10.72, significantly less than Bajaj Housing Finance (30.92) and Aadhar Housing Finance (19.97), though higher than LIC Housing Finance (5.44). Analysts generally hold a positive view, with 10 out of 12 recommending a 'Buy' and an average 12-month price target of ₹1,044.67, indicating potential upside of over 13%. The broader Indian housing finance market is projected for substantial growth, reaching USD 839.91 billion by 2034, with affordable housing expected to grow at 19.8% annually. However, the stock has lagged the BSE 100 index over the past year, falling about 12.64%, and is down 8.47% year-to-date, suggesting investors are not fully convinced by earnings growth alone.
