Fundamentals of PNB Housing need to catch up with the stock now: Analysts

Published On: Wednesday, June 2, 2021 | By:

Fundamentals of PNB Housing need to catch up with the stock now: Analysts

Shares of PNB Housing Finance (PNB HF) have soared a massive 58 percent in three days on the bourses after the housing financier announced equity infusion worth Rs 4,000 crore, led by Carlyle Group, removing a key overhang on the company’s growth outlook. The fact that the capital raising plan was nearly double what was expected (Rs 1,800 crore) has helped the counter jump a massive 279 percent from its 52-week low level of Rs 183, hit on June 2, 2020. It is difficult to predict Whether PNB HF will deliver on the growth projections that don’t look promising - at least till the financial year 2022-23 - 2023-24 (FY23-FY24).

"The capital infusion plan should help PNB HF to refocus on growth after six quarters of loan book contraction. However, as it’s likely to continue shedding its wholesale book (16 per cent of AUM), net balance sheet growth will take longer to come through even as disbursements pick up in the retail loan portfolio (Loan Against Property or LAP and affordable)," say analysts.

The highest target price on the stock (Rs 678) is 2 per cent below its current price, while the lowest price (Rs 575) is 17 per cent below its CMP.

Considering the its LAP (26 per cent of loans including non-residential premises) and other factors, analysts expect PNB HF’s earnings per share (EPS) and book value per share to drop going ahead.

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