PNB Housing Finance shares drop over 8% to 2-week low after block deal

PNB Housing Finance, a registered housing finance company with the National Housing Bank (NHB), saw its shares tumble 8.12% in today's intraday trade, hitting a 2-week low of ₹724.55 apiece. This downturn in shares came after 6.96 million shares, or 2.68% of the total equity of the company, changed hands in a block deal window today, according to a CNBC-TV18 report. 

The buyers and sellers, however, were not known immediately. Earlier, CNBC-TV18 reported that General Atlantic Singapore Fund FII Pte Ltd. and Asia Opportunities V (Mauritius) Limited would sell shares worth ₹500 crore in PNB Housing Finance in a block deal on Wednesday.

The floor price for the block deal was fixed at ₹717 per share, which represents a 9% discount to Tuesday's closing price of the stock, according to the report.

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According to Trendlyne's shareholding data, General Atlantic Singapore Fund FII Pte Ltd. held a 9.82% stake in the company and has maintained a stake above 9% consistently since June 2018. Asia Opportunities V (Mauritius) owned a 9.88% stake in the company as of Q4 FY24.

General shareholders held the largest stake in the company at 40%, while Punjab National Bank held a 28.1% stake at the end of the March quarter.

The company's shares have been on a downward spiral since hitting a six-year high of ₹913.95 in January. Considering the current market price, they are down 19% from that peak.

Looking at the company's financials, it reported a 57% improvement in net profit during Q4, driven by steady demand for home loans and a decline in bad loans. For FY24, profit after tax increased by 44% year-over-year (YoY), reaching ₹1,508 crore compared to ₹1,046 crore.

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Disbursements during FY23–24 grew by 17% YoY to ₹17,583 crore. For Q4 FY23–24, disbursements stood at ₹5,574 crore, marking an increase of 24% YoY and 35% quarter-over-quarter (QoQ). Assets Under Management (AUM) grew by 7% YoY and 4% QoQ to ₹71,243 crore as of March 31, 2024.

Retail loan assets grew by 14% YoY to INR 63,306 crore as of March 31, 2024, comprising 97% of the total loan assets.

Rating upgrades

On Monday, CRISIL upgraded the company's long-term debt instruments and bank facilities to 'CRISIL AA+/Stable' from 'CRISIL AA/Positive.' The rating for the short-term bank facilities and debt instruments was reaffirmed at 'CRISIL A1+.'

CRISIL stated that the rating upgrade reflects the company's improving profitability and asset quality metrics. The company's strong capitalisation and increased granularity, with most of the legacy portfolio having been provided for, also support its overall credit profile.

Earlier, CARE Ratings upgraded PNB Housing's rating to 'AA+' from 'AA,' with a 'stable' outlook, changing from the previous 'positive' outlook. Similarly, ICRA raised PNB Housing Finance's debt instrument rating to 'ICRA AA+ (Stable)' from 'ICRA AA (Positive).' 

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Like CRISIL, ICRA attributed the upgrade to consistent enhancements in the company's credit profile, driven by improvements in asset quality metrics and a strengthened capitalisation profile.

In the highly competitive mortgage finance sector, ICRA emphasised the importance of PNB Housing's ability to sustain its net interest margin, enhance operational efficiency, and manage credit costs effectively from a credit standpoint.

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