PNB Housing — Q2 FY26 earnings call

Call held 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

  • 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

  • Leadership Transition Uncertainty

Key financials

  1. Net Interest Income ₹765 Cr +14%YoY
  2. PAT ₹582 Cr +24%YoY
  3. NIM 3.7% -1.9%QoQ
  4. GNPA 1% -16.1%YoY
  5. Spread 2.3% +1.4%QoQ
  6. CRAR 29.8%

What they filed

Q1 FY27: revenue up 9.0%, net profit up 4.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,879 1,942 2,022 2,076 2,128 +13%2,119 +9%2,182 +8%2,263 +9%
Net profit470 483 550 534 582 +24%520 +8%656 +19%557 +4%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentLoan BookDisbursements
Affordable (Roshni)₹6,531 Cr₹828 Cr
Emerging Markets—₹2,122 Cr
Corporate₹332 Cr—

Guidance & targets

Revenue

  • Loan Book Growth Revenue · FY26 · High confidence 17% to 18%
    See, we have guided for the year to grow at around 17% to 18%, so that remains.

    — Vinay Gupta, CFO

Margin

  • NIM Band Margin · FY26 · High confidence 3.6% to 3.7%
    We have given a guidance of 3.6% to 3.7% as NIM guidance for this year.

    — Vinay Gupta, CFO

  • Affordable Segment Yield Margin · Coming quarters · Medium confidence 12.25%

    From 12.13% today

    The yield is at 12.13%, marching towards 12.25% in the coming quarters.

    — Valli Sekar, CBO - Affordable

Profitability

  • OPEX-to-ATA Profitability · FY26 · High confidence 1% to 1.1%
    Similarly, OPEX-to-ATA is stable at around 1.02%. We maintain the guidance of around 1% to 1.1% going ahead.

    — Vinay Gupta, CFO

Market Share

  • Affordable AUM Mix Market Share · FY27 · Medium confidence 15%
    Yes. We are working on that strategy [15% Affordable AUM by FY27].

    — Vinay Gupta, CFO

Other

  • Affordable Branch Count Other · End of FY26 · High confidence 250

    From 198 today

    By the end of this year, we are talking about having 250 branches in Affordable housing so that remains.

    — Valli Sekar, CBO - Affordable

Risks & concerns

  • Leadership Transition Uncertainty

    high

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

    Analyst deflected

  • Affordable Portfolio Seasoning

    medium

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

    Both acknowledged

  • NIM Compression

    medium

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

    Management acknowledged

Areas of evasion (2)

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

Q&A highlights

2 direct, 1 evasive
New CEO Appointment Timeline Evasive
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

Spike in Affordable Segment Delinquencies Direct
Renish, you will appreciate that the portfolio is getting matured... this spike is going to be there. I would appreciate if we do not see affordable on quarter-to-quarter basis, because every quarter is going to be different.

Reveals that the 'Roshni' book is entering a seasoning phase where higher delinquencies (30+ DPD at 1.40%) are expected as it moves into tier 3/4 markets.

Asked by Renish, ICICI

Corporate Account Foreclosure and ECL Release Direct
This was a standard account and they wanted to close the loan... the ECL release was close to around Rs. 70 crores from the account. It was a standard performing account.

Clarifies that a significant portion of the quarter's profitability and negative credit cost came from a one-time release of provisions due to a ₹330 crore corporate loan foreclosure.

Asked by Abhijit Tibrewal, Motilal Oswal

2 min read 5 chapters

Detailed narrative

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.

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%.

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.

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.

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.

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