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Mint
14-05-2025
- Business
- Mint
PNB Housing eyes affordable, emerging segments to boost loan yields
Mumbai: After grappling with slower growth and elevated non-performing assets (NPAs) in its commercial loan portfolio, PNB Housing Finance is shifting its focus to profitability and margin maximization. The lender is targeting high-yielding affordable and emerging markets to counter competitive pressures from banks offering cheaper loans in prime and super-prime categories, according to a senior executive at the company. This shift also comes amid increasing competition from traditional housing finance companies (HFCs) like LIC Housing Finance, which are similarly targeting middle-to-lower-income customers. To achieve profitability, PNB Housing Finance is expanding its retail housing portfolio by increasing affordable and emerging market loans, opening new branches to serve these segments, and diversifying into commercial loans and the newly launched loan against property (LAP) vertical. Read this | Banks to walk the margin tightrope in Q1 as outlook remains uncertain PNB Housing's plans to grow its retail loan book from the current ₹75,000 crore to ₹1 trillion by FY27. Of this, the affordable housing book (branded as Roshni) will account for ₹15,000 crore, or 15% of the portfolio; the emerging segment will be around ₹25,000 crore, and the prime segment will make up the remaining ₹60,000 crore, said managing director and CEO Girish Kousgi. As of 31 March 2025, PNB Housing's assets under management (AUM) stood at ₹80,397 crore, of which loan assets comprised ₹75,765 crore, and retail loans accounted for 99% of all loan assets. Affordable and emerging segments 'We have very ambitious plans for both emerging and affordable businesses," said Kousgi, adding that while demand has been strong across segments, growth was higher in affordable and emerging segments in FY25 due to the smaller size of the books and margin pressure on the prime side. The emerging segment, launched in FY25, grew about 21% during the year, while the affordable loan segment rose 183% to ₹5,070 crore, with plans to expand to ₹9,500 crore by the end of the current financial year. Read this | PNB Housing's affordable loans drive pushes it to revive its commercial mortgage biz 'Our focus is slightly less on prime because of profitability reasons. The focus is more towards emerging and affordable," Kousgi said. The latter two segments currently account for 40% of incremental disbursements and comprise 23% of the total loan portfolio. The lender aims to increase this to 40% by FY27, he said. These segments are appealing because they largely consist of middle-to-lower-income customers and first-time homebuyers with limited credit histories, allowing HFCs to charge higher interest rates compared to prime borrowers who often receive finer pricing from banks. The current average yield for the emerging segment is around 10.25%, while the affordable segment yields 12.65%. The broader housing finance market also reflects a growing emphasis on lower-ticket loans. According to data from quasi-housing regulator National Housing Bank, loans to economically weaker section (EWS) borrowers comprised 12% of total disbursements by housing finance companies in the first half of FY25, while loans to the lower-income group accounted for 21%. However, despite the growing focus on affordable loans, the largest share of disbursements in FY24 was still concentrated in the higher-ticket segment. Loans above ₹25 lakh accounted for 58% of total disbursements, up 18.9% year-on-year, while loans up to ₹10 lakh rose 6.3% during the same period. After de-growing the commercial book in FY25, the housing financier has started re-looking at the corporate segment and plans to do about ₹1,500 crore of business in FY26 in this portfolio. "We have kind of restarted, so we will see disbursements happening in this year," Kousgi said, attributing the renewed interest in the segment to it being more margin accretive. In FY25, corporate loan disbursements were just ₹66 crore, down 55% year-on-year, with no incremental disbursements in the last quarter. "We want to take the overall mix of non-housing loans, at an enterprise retail level, to 31-32% from close to 30% today. That will help us on the yield," he said, adding that the recently launched loans against property (LAP) vertical will also help give an 'upside on yield". Balancing prime and super-prime exposure Amid a strategic move to higher-yielding loans, PNB Housing has halted fresh disbursements in the super-prime segment and slowed growth in prime loans, which grew 12% on-year in FY25. Kousgi said that within the prime segment, the focus is on 'identifying certain pockets, certain products where we get a higher yield," particularly in cities like Chennai, Hyderabad, and Bangalore, rather than the costlier real estate markets of Delhi NCR and Mumbai. PNB Housing should be able to improve the yield for the prime segment to 9.5-9.6% in FY26 from 9.4% currently led by a better mix of customer profile, product and geography, he added. While banks benefit from lower borrowing costs and can offer finer pricing to prime customers, non-bank lenders like PNB Housing face tighter spreads. The lender's loan spread remained flat at 2.19% in Q4 and FY25, with a 10 basis point sequential decline, underscoring the impact of limited pricing power in the prime segment. The shift to emerging and affordable loans is an attempt to offset this compression with higher-yielding segments. Disbursements in the final quarter of the last fiscal year (Q4FY25) were at ₹6,854 crore, up 24% year-on-year and 27% sequentially. Of this, prime loan segment disbursements were ₹4,141 crore, up 7% year-on-year, emerging segment disbursements were ₹1,422 crore, up 40% year-on-year, and affordable loans were ₹1,291 crore, doubling from the previous year. Profitability and operational challenges PNB Housing Finance reported a net profit of ₹550 crore for Q4FY25, up 25% on year and 14% on quarter. However, JM Financial Research noted that the profit was primarily driven by recoveries from the retail written-off pool, rather than core operational gains. Recoveries from written-off accounts more than doubled for the lender to ₹178 crore in FY25, compared with ₹68 crore in the previous year. PNB Housing saw a provision write-back of ₹64.8 crore, largely driven by recoveries from its retail write-offs pool. The brokerage firm said that PNB Housing's profitability in the near term is likely to remain tied to recoveries, with an outstanding write-off pool of ₹1,400 crore– ₹1,000 crore in corporate loans and ₹400 crore in retail loans–expected to drive further provision write-backs. Gross non-performing assets (NPAs) improved to 1.08% as of 31 March 2025, from 1.50% a year earlier, while net NPAs fell to 0.69% from 0.95%. However, the bounce rate for affordable loans increased to 11% in Q4FY25 from 10.4% in the previous quarter, and 8.2% a year ago, a rise Kousgi attributed to the book's growth rather than underlying stress. Read this | Are banks hiding weak asset quality with higher loan write-offs? Kousgi aims to reduce the gross NPA ratio to 1% in FY26. 'With recoveries expected to continue from the balance write-off pool, PNB Housing's credit costs are likely to remain low for the near term. Over the medium term, steady state credit costs are estimated at 20 bps (basis points)," JM Financial said, adding that a strong growth trajectory, steady branch expansion and consistent recoveries from written-off accounts should help keep the RoA (return on assets) at an average of 2.5% over FY25-FY27. Even as the focus has started shifting to higher-yielding segments, the lender's average yield on advances moderated to 10.03% in Q4FY25 from 10.12% in Q3FY25 and 10.08% in the corresponding quarter of the previous H The cost of borrowing remained stable at 7.84%, slightly up from 7.83% in the previous quarter but lower than the 7.98% recorded in Q4FY24. As a result, net interest margin (NIM) improved marginally to 3.75% in Q4FY25, up from 3.7% in Q3FY25 and 3.65% in the same period a year ago. Motilal Oswal Financial Services noted that PNB Housing's stock trades at 1.2x FY27 price-to-book value, with a favourable risk-reward profile. Yet, there are risks: the lender may struggle to expand net interest margins amid aggressive mortgage competition, and seasoning in the affordable loan book could lead to asset quality deterioration and elevated credit costs. Also read | Mint Explainer: How RBI's new digital lending rules will impact lenders and borrowers Nonetheless, Kousgi remains optimistic, highlighting the lender's capital adequacy ratio of 29% as a safeguard against immediate capital-raising needs. The reversal of risk weights on bank loans to non-banking financial companies (NBFCs) has also helped stabilize borrowing costs.
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Business Standard
02-05-2025
- Business
- Business Standard
Sebi mulls easing InvIT, REIT norms to boost ease of doing business
The market regulator is mulling relaxations to the Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) framework in a bid to promote ease of doing business. The Securities and Exchange Board of India (Sebi) issued a discussion paper on Friday proposing a slew of reliefs. These include changes in the definition of 'public' for minimum public unitholding requirement, alignment of minimum allotment with trading lot for privately placed InvITs, and timelines for submitting various reports. Sebi has also sought comments on adjustment of negative cash flows at holding companies with distributions received from special purpose vehicles (SPVs) in calculation of net distributable cash flow (NDCF). NDCF refers to the amount a REIT can distribute to its unitholders after deducting all operational expenses and obligations. Sebi proposes reducing disclosures in QIP document The Securities and Exchange Board of India (Sebi) proposed amendments to the "placement document" for qualified institutions placement (QIP) on Friday, aiming to streamline disclosure requirements by focusing solely on issue-relevant information. QIP, a key fundraising avenue for listed companies, accounted for 35 per cent of equity-based fund mobilisation in 2023–24. Sebi's proposal considers that listed companies already comply with continuous disclosure obligations, and the existing format's extensive requirements may be time-consuming and lead to redundant information. Sebi relaxes norms for stock brokers to expand in GIFT City The Securities and Exchange Board of India (Sebi) on Friday waived the requirement of seeking specific approvals from the regulator for stock brokers to undertake business in GIFT-IFSC. In a circular, the market regulator stated that brokers could undertake securities market-related activities under a separate business unit (SBU), which will have to be ring-fenced from the activities in the domestic market and the accounts will be kept at arm's length. Net worth of the SBU will also be considered separately. Further, decisions on eligibility, risk management, inspection, claims and investor grievance for such SBUs will fall under the GIFT City regulator. Carlyle exits PNB Housing Private equity (PE) major Carlyle Group's affiliate firm Quality Investment Holdings on Friday sold its entire 10.44 per cent stake in mortgage lender PNB Housing Finance. The PE major sold 27.12 million shares at ₹1,000.2 apiece to raise ₹2,713 crore. Several mutual funds (MFs) and foreign investors bought shares in small quantities. Among the top buyers were Kotak Mahindra MF (₹342 crore), Nippon India MF (₹301 crore), Morgan Stanley (₹130 crore) and Aditya Birla Sun Life MF (₹125 crore). Shares of PNB Housing rose 4.3 per cent after the 'clean out' trade to end at ₹1,054, valuing the company at ₹27,383 crore.
Time of India
02-05-2025
- Business
- Time of India
Carlyle looks to offload remaining stake in PNB Housing
MUMBAI: US-based private equity giant Carlyle is looking to offload its entire remaining stake in PNB Housing Finance through a $308 million - or ₹2,604 crore - block trade on Friday, according to a term sheet issued by IIFL Capital . The sale is being executed via Quality Investment Holdings , a Carlyle affiliate, which is offering its entire holding of 27.1 million shares, representing a 10.44% stake in the mortgage lender. The floor price for the sale has been fixed at ₹960 per share, implying a 5% discount to PNB Housing 's April 30 closing price of ₹1,010.20 on the National Stock Exchange. The transaction is entirely secondary in nature and will be handled by IIFL Capital Services, acting as the sole bookrunner and placement agent. Carlyle initially entered PNB Housing in 2015, acquiring a 49% stake for ₹1,600 crore. The stake was subsequently diluted to around 33% following the mortgage lender's IPO in October 2016. As of June 30, 2024, Carlyle held a 32.68% stake in PNB Housing Finance . The firm has been paring its holding in phases - selling a 12.8% stake in July 2024 via open market transactions for ₹2,578 crore, followed by another 9.43% in November for ₹2,300 crore, which brought down its stake to the current 10.44%. In rupee terms, Carlyle's investment in PNB Housing has yielded an estimated return of around 367% over a 10-year period. In May 2021, the PNB Housing board approved a ₹4,000-crore capital raise led by Carlyle, which had committed up to ₹3,185 crore via preferential allotment at ₹390 per share. However, the plan hit regulatory hurdles when Sebi halted the transaction, citing the need for a fresh valuation based on the company's Articles of Association. PNB Housing challenged the Sebi order in the Securities Appellate Tribunal (SAT) but later withdrew the appeal and cancelled the capital raise in September 2021. Shares of PNB Housing have delivered a stellar rally, rising 127% over the past two years and surging 516% over the last five years. In comparison, the Nifty gained 35% and 147%, respectively, during the same periods. PNB Housing Finance remains a key subsidiary of Punjab National Bank (PNB), which held a 28.10% stake in the company as of March 31, 2025. The firm is engaged primarily in providing housing and construction finance, catering to both individual and corporate borrowers.
Business Upturn
02-05-2025
- Business
- Business Upturn
PNB Housing shares jump over 7% after shares worth Rs 1,732.03 crore change hands in block deal
By Aditya Bhagchandani Published on May 2, 2025, 09:39 IST Shares of PNB Housing Finance surged 7.3% to ₹1,083.60 in Friday's early trade after a large block deal took place as the market opened. Approximately 4.19% worth Rs 1732.03 crore of the company's equity exchanged hands during the pre-market block window, today. According to CNBC-TV18, Carlyle Group's affiliate Quality Investment Holdings PCC sold its entire 10.44% stake in the company through block deals. The stake sale involved 27.1 million shares with a total deal size of ₹2,604 crore. The floor price was set at ₹960 per share, representing a 5% discount to PNB Housing's April 30 closing price of ₹1,010.20 on the NSE. This transaction marks Carlyle's complete exit from PNB Housing, nearly a decade after its initial ₹1,600 crore investment for a 49% stake in 2015. Over the years, Carlyle steadily pared down its holdings, trimming it to 32.68% post-IPO in 2016, then selling 12.8% in July 2024 for ₹2,578 crore and another 9.43% in November 2024 for ₹2,300 crore. With today's sale, Carlyle's estimated return on investment stands at a strong 367% in rupee terms. IIFL Capital Services acted as the sole bookrunner and placement agent for the fully secondary transaction. Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.
Economic Times
02-05-2025
- Business
- Economic Times
PNB Housing Finance shares in focus as Carlyle looks to offload 10.44% stake via block deal
Live Events PNB Housing Finance share price performance (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Shares of PNB Housing Finance will be in focus on Friday as Carlyle Group plans to divest its remaining 10.44% stake in the company through a block trade worth $308 million (Rs 2,604 crore), according to a term sheet issued by IIFL Capital The sale will be executed via Quality Investment Holdings, a Carlyle affiliate, which is offering 27.1 million shares. The floor price has been set at Rs 960 per share, representing a 5% discount to PNB Housing's April 30 closing price of Rs 1,010.20 on the NSE. The transaction is entirely secondary and will be managed by IIFL Capital Services, the sole bookrunner and placement entered PNB Housing Finance in 2015 with a Rs 1,600 crore investment for a 49% stake. Its holding was diluted to around 33% after the mortgage lender's IPO in October of June 30, 2024, Carlyle held a 32.68% stake. The firm has steadily trimmed its position—selling 12.8% in July 2024 for Rs 2,578 crore and another 9.43% in November 2024 for Rs 2,300 crore—bringing its holding down to the current 10.44%.In rupee terms, Carlyle's investment in PNB Housing has yielded an estimated return of around 367% over a 10-year May 2021, the PNB Housing board approved a Rs 4,000-crore capital raise led by Carlyle, which had committed up to Rs 3,185 crore via preferential allotment at Rs 390 per share. However, the plan hit regulatory hurdles when Sebi halted the transaction, citing the need for a fresh valuation based on the company's Articles of Housing challenged the Sebi order in the Securities Appellate Tribunal (SAT) but later withdrew the appeal and cancelled the capital raise in September of PNB Housing have delivered a stellar rally, rising 127% over the past two years and surging 516% over the last five years. In comparison, the Nifty gained 35% and 147%, respectively, during the same Housing Finance remains a key subsidiary of Punjab National Bank (PNB), which held a 28.10% stake in the company as of March 31, 2025. The firm is engaged primarily in providing housing and construction finance, catering to both individual and corporate borrowers.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
