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    PNB Housing

    PNBHOUSINGGood
    Financial Services·27 Oct 2025
    Management Summary

    PNB Housing delivered a strong operational performance in Q2 FY26, characterized by robust retail disbursement growth and significant improvements in asset quality. The company is successfully pivoting toward high-yield Affordable and Emerging segments, which now account for 38% of the retail book. While margins saw slight pressure from investment yields, the bottom line was bolstered by substantial recoveries and the foreclosure of a large corporate account.

    Highlights

    7

    • PAT grew 24% YoY to ₹582 crores, supported by a significant credit cost reversal.

    • Retail loan book reached ₹79,439 crore, growing 17% YoY and now comprising 99.6% of total loans.

    • Affordable housing (Roshni) segment saw 121% YoY growth in loan book to ₹6,531 crores.

    • Gross NPA improved to 1.04% from 1.06% QoQ and 1.24% YoY.

    • Net Interest Margin (NIM) stood at 3.67%, slightly down from 3.74% in Q1 FY26 due to lower investment yields.

    • Credit cost was negative at -53 bps, driven by ₹60 crore recovery from written-off pool and ₹70 crore ECL release from a corporate foreclosure.

    • Disbursements for the quarter were ₹5,995 crores, up 20% sequentially.

    Concerns

    1

    • Leadership Transition Uncertainty

    Key financials

    Single quarter

    06 metrics
    1. 01Net Interest Income₹765 Cr+14.0%YoY
    2. 02PAT₹582 Cr+24%YoY
    3. 03NIM3.7%-1.9%QoQ
    4. 04GNPA1.0%-16.1%YoY
    5. 05Spread2.3%+1.4%QoQ

    Segment breakdown

    Loan BookDisbursements
    Affordable (Roshni)₹6,531 Cr₹828 Cr
    Emerging Markets—₹2,122 Cr
    Corporate₹332 Cr—
    Heatmap· 2 shared metrics

    Guidance & targets

    6
    CategoryTargetPriority
    Revenue
    Loan Book Growth
    17% to 18%
    		High
    Margin
    NIM Band
    3.6% to 3.7%
    		High
    Margin
    Affordable Segment Yield
    12.25%
    		Medium
    Profitability
    OPEX-to-ATA
    1% to 1.1%
    		High
    Market Share
    Affordable AUM Mix
    15%
    		Medium
    Other
    Affordable Branch Count
    250
    		High

    Risks & concerns

    5
    RiskSeverity

    Leadership Transition Uncertainty

    Multiple analysts raised concerns about the lack of a new CEO, noting it has impacted stock price and market cap. — Analyst deflected

    high

    Affordable Portfolio Seasoning

    As the Roshni book matures (12-24 months), delinquencies are rising; 30+ DPD is at 1.40%. — Both acknowledged

    medium

    NIM Compression

    NIM declined from 3.74% to 3.67% due to lower investment yields and competitive pricing in Prime segments. — Management acknowledged

    medium

    Areas of Evasion(2)

    • CEO search timeline and candidate pool details
    • Specific employee headcount breakup across business segments

    Q&A highlights

    3

    “You will appreciate that given the sensitivity of the process involved, it will be difficult to comment on that at the current time.”

    The market is concerned about the leadership vacuum following the previous CEO's exit; management's refusal to provide a timeline adds to uncertainty.

    asked by Devang Shah, Individual Investor

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Pivot to High-Yield Segments

    PNB Housing is aggressively shifting its portfolio mix toward Affordable (Roshni) and Emerging market segments, which now constitute 38% of the retail loan book. The Affordable segment grew 121% YoY to ₹6,531 crores, with yields improving to 12.1%. Management targets this segment to reach 15% of the total AUM by FY27, representing approximately ₹15,000 crores.

    02

    Asset Quality and the 'Negative' Credit Cost

    The company reported a negative credit cost of 53 bps for the quarter, a rare occurrence driven by ₹60 crore in recoveries from written-off pools and a ₹70 crore ECL release following the foreclosure of a ₹330 crore corporate account. While GNPA improved to 1.04%, the Affordable segment is seeing a natural 'seasoning' spike in 30+ DPD to 1.40%, though it remains well below the industry average of 3.7%.

    03

    Margin Management Amidst Rate Pass-Throughs

    Despite a 10 bps rate pass-through to customers, the company maintained spreads at 2.26%, up from 2.23% in Q1. This was aided by a 7 bps decline in the cost of borrowing to 7.69%. However, NIM compressed to 3.67% from 3.74% QoQ, primarily due to lower yields on investments. Management expects NIM to remain range-bound between 3.6% and 3.7% for the full year.

    04

    Branch Expansion and Productivity Models

    The company has expanded its footprint to 356 branches, with 198 dedicated to the Affordable segment. Management introduced a tiered productivity model for branches (Ganga, Yamuna, Kaveri), where 'Ganga' branches target ₹1.8 crore in monthly disbursements. They plan to add 40-50 branches annually, aiming for 250 Affordable branches by the end of FY26.

    05

    Leadership Vacuum Remains a Key Concern

    A significant portion of the Q&A session focused on the vacant CEO position. Management remained defensive, stating that the Board is conducting a transparent search but refusing to provide a timeline or confirm if the candidate would be internal or external. This leadership transition remains the primary 'red flag' for investors despite strong operational numbers.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.