Detailed Narrative
Affordable Housing (Roshni) Emerges as Growth Engine
The 'Roshni' segment has achieved a significant milestone, crossing a ₹3,000 crore loan book within 22 months of operation. This segment grew 300% YoY in loan book and 68.5% YoY in disbursements during Q2 FY25. Management is targeting a ₹5,000 crore book by the end of FY25 and ₹15,000 crore by FY27. Incremental yields in this segment have reached 12%, significantly higher than the company average.
Strategic Pivot in Prime Segment Yields
To counter intense competition in the Prime segment, PNB Housing is shifting its focus from ultra-HNI customers to the mass-affluent segment. This move has allowed them to increase incremental yields in Prime by 15 basis points over the last six months. The average ticket size in Prime has been moderated to ₹35 lakhs, down from historical levels where ₹5 crore+ cases were common.
Asset Quality Reaches Multi-Year Highs
Gross NPA improved to 1.24%, down from 1.35% in Q1 FY25. The company is seeing strong recovery momentum, collecting ₹48 crores from the retail written-off pool this quarter compared to ₹28 crores in Q1. Management expects this recovery trend to continue for the next 4-5 quarters, supported by a written-off pool of ₹1,250 crores in Corporate and ₹500 crores in Retail.
Controlled Re-entry into Corporate Lending
PNB Housing plans to restart its corporate business in the coming months with a vastly different risk profile. The new strategy focuses on construction finance for Category A and B developers in select cities, with ticket sizes capped around ₹200 crores (down from ₹350-400 crores previously). The corporate book is intended to remain below 10% of the total portfolio to maintain a retail-heavy balance sheet.
Operational Efficiency and Digital Transformation
The company is leveraging technology to drive productivity, with 80% of the Affordable segment onboarding now digitized. OPEX grew 19% YoY to ₹199 crores, primarily due to the addition of 100 branches in the previous year. However, management expects OPEX to AUM to settle between 1%-1.1% as these new branches mature and achieve economies of scale.