Global brokerage firm JPMorgan has maintained PNB Housing Finance as its top pick among housing finance companies and IIFL Finance as its preferred stock among gold lenders following recent management meetings. According to reports from CNBC TV18, the brokerage highlighted several key takeaways from these meetings, including the impact of liquidity flows, interest rates, market-share gains and asset quality across the housing finance and gold loan segments. The brokerage emphasized that conditions remain strong on asset quality, with risks largely limited to the micro-loan against property (micro-LAP) segment. As per JPMorgan, the influx of liquidity from foreign currency non-resident (FCNR) deposits is not prompting banks to increase competitive intensity in mortgages nor translating into lower cost of funds for NBFCs. This represents a significant development as banks flush with deposits are usually expected to price aggressively in mortgages and squeeze NBFCs, but this trend is not materializing.
As reported by CNBC TV18, JPMorgan noted that NBFCs continue to gain market share in both the housing finance and gold loan segments. The brokerage emphasized that conditions remain strong on asset quality, with risks largely limited to the micro-loan against property (micro-LAP) segment. This positive outlook reflects the continued growth trajectory of these specialized lending segments, with JPMorgan noting that both halves of the competitive picture remain unchanged despite the FCNR flow influx. The money has arrived without changing the competitive picture at either end, maintaining the favorable conditions for NBFC growth across both segments.
For PNB Housing Finance, JPMorgan estimates that net interest margin (NIM) could improve by around 10 basis points, with earnings per share (EPS) rising 3-5% for every 25 basis points increase in the policy rate. According to the brokerage's analysis, the influx of liquidity from foreign currency non-resident (FCNR) deposits is not prompting banks to increase competitive intensity in mortgages nor translating into lower cost of funds for NBFCs. The company closed at ₹1,085 against a 52-week range of ₹730 to ₹1,212, trading on about 12 times trailing earnings. Among analysts covering PNB Housing Finance, 13 of 15 have a 'Buy' rating, while two have a 'Hold' rating.
For IIFL Finance, JPMorgan sees limited scope to pass on higher interest rates to gold loan borrowers, as reported by CNBC TV18. The brokerage's assessment suggests that while the company maintains its preferred position among gold lenders, the pricing dynamics in this segment may present challenges for rate transmission. IIFL Finance closed at ₹598 against a range of ₹409 to ₹705, trading on about 17 times. The company's limited ability to pass higher rates on to gold loan borrowers represents a real divergence within the non-bank lending sector, as one pick gains from tightening conditions while the other absorbs them. This divergence is worth knowing before treating the two as a single call on non-bank lending, with cost of funds disclosure at both companies and gold loan yields at IIFL through rate increases being key factors to monitor.
According to CNBC TV18, shares of PNB Housing Finance were trading 1.65% higher at ₹1,102.90 on Tuesday and have gained 12% so far this year. In contrast, IIFL Finance shares were down 1.18% at ₹591.10 and have declined 5% year-to-date. Among analysts covering PNB Housing Finance, 13 of 15 have a 'Buy' rating, while two have a 'Hold' rating, and for IIFL Finance, seven of eight analysts have a 'Buy' rating with one 'Hold' rating.
