Concall AI

PNB Housing — Q3 FY26 earnings call

Call held 27 Jan 2026

Management summary

PNB Housing Finance reported a robust Q3 FY26 with strong retail loan book growth of 16% YoY, driven by significant expansion in Affordable and Emerging Market segments. Asset quality improved with GNPA at 1.04%, and cost of borrowing declined. However, the affordable segment faced disbursement challenges due to strategic recalibration, and yields saw a decline partly due to a corporate account foreclosure. The company plans to launch Construction Finance and Emerging Developer Finance to improve yields and NIMs.

Highlights

Retail loan book grew by 16% YoY to INR 81,931 crores as on 31st December 2025.
Affordable and Emerging Market segments grew 31% YoY, now constituting 39% of retail loan book.
Gross NPA improved to 1.04% as on 31st December 2025 from 1.19% on 31st December 2024.
Cost of borrowing improved by 19 bps sequentially to 7.50% in Q3 FY26.
PAT stood at INR 520 crores, up 7.7% YoY.

Concerns

Affordable segment disbursement saw a 15% Y-o-Y drop and 4.5% QoQ decline due to strategic recalibration in challenging geographies.
Yield declined to 9.72% in Q3 FY26 versus 9.95% in Q2 FY26, partly due to a large corporate account foreclosure impacting 10 bps.
Operating expenses grew 16.7% YoY and 10.5% QoQ, including a one-time expense of INR 6 crores for new labour codes.

Key financials

2 periods

Headline

Retail Loan Book
₹81,931 Cr
YoY +16%
Total Loan Book
₹82,203 Cr
YoY +14%
Asset Under Management
₹86,048 Cr
Gross NPA
1%
NIM
3.6%
Retail Disbursement
₹6,217 Cr
YoY +16%
Cost of Borrowing
7.5%
PAT
₹520 Cr
YoY +7.7%
CRAR
29.5%
Tier 1 Capital
28.9%
Debt to Equity
3.63
Yield
9.7%

Annualised 9M FY26

ROA
2.6%
ROE
12.3%

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	1,879	1,942	2,022	2,076	2,128 +13%	2,119 +9%	2,182 +8%	2,263 +9%
Expenses	143	155	133	145	88	183	52	192
Other income	1	1	15	6	3	2	-10	2
Interest	1,118	1,158	1,178	1,234	1,267	1,253	1,246	1,339
Depreciation	14	14	14	15	16	16	19	16
Profit before tax	605	616	711	688	760 +26%	668 +8%	855 +20%	718 +4%
Tax rate	22%	22%	23%	22%	23%	22%	23%	22%
Net profit	470	483	550	534	582 +24%	520 +8%	656 +19%	557 +4%
EPS	18.08	18.60	21.17	20.51	22.33	19.97	25.17	21.39

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

Affordable and Emerging Market
39% Share of Retail Loan Book31% YoY Growth (Loan Book)
Affordable Segment
-15% YoY Disbursement Growth-4.5% QoQ Disbursement Growth
Emerging Markets Segment
25% YoY Disbursement Growth
Prime Segment
20% YoY Disbursement Growth
Corporate Book
₹272 Cr Loan Book

Capital allocation

high confidence

Debt Debt disclosed Cost 7.5%
- Rate reset Cost of borrowing improved by 19 bps sequentially to 7.50% in Q3 FY26, driven by ongoing negotiations with banks and the impact of repo rate cuts. Incremental cost of borrowing improved to 7.2% in Q3 FY26.
As far as borrowing is concerned, our cost of borrowing improved by 19 bps sequentially to 7.50% in Q3 FY26, driven by ongoing negotiations with banks and the impact of repo rate cuts. The incremental cost of borrowing improved to 7.2% in Q3 FY26 as compared to 7.42% in the previous quarter.

Guidance & targets

Volume

Retail book growth Volume · Ongoing · High confidence 17% to 18%

Let me reiterate that we will continue the guidance of retail book growth in the range of 17% to 18% with higher focus on Emerging Markets and Affordable segments.

— Ajai Kumar Shukla
Construction Finance and Emerging Developer portfolio share of total book Volume · Any given point of time · High confidence 8% to 10%

Yes, so Kunal, I think what we have planned is that we will be having almost 8% to 10% of my total book as our exposure in Construction Finance and Emerging Developer portfolio. Any given point of time, it would be in the range of 8% to 10% only.

— Ajai Kumar Shukla
New branches added annually Volume · Annually · High confidence 40 to 50

Aligned with our long-term growth ambitions, we expect to add 40 to 50 new branches annually to deepen our presence in Tier 2 and Tier 3 cities.

— Ajai Kumar Shukla
Total branches Volume · End of FY27 · High confidence 75 to 80

No, so 50 branches, if I take about end of FY27, it would be around 75 to 80 branches, but because these branches which will come up in Q4 will actually reflect in FY27, plus branches will also be working on that. So, the total number of branches put together for this year and next year would be around 70 to 80 branches.

— Ajai Kumar Shukla
Affordable housing growth Volume · Quarter-on-quarter ongoing · High confidence 20% to 25%

But now we will come as per the industry standard to 20% to 25% quarter-on-quarter growth ongoing, Himanshu.

— Ajai Kumar Shukla
Construction Finance growth cap Volume · Next two to three years · High confidence 5% to 7%

It will remain range bound between 5% to 7% in the next two to three years. So it will not grow so aggressively.

— Vinay Gupta

Asset Quality

GNPA Asset Quality · Ongoing · High confidence 1% to 1.1%

We remain deeply focused on maintaining portfolio discipline and continue to work forward in achieving our long-stated target of 1%-1.1% GNPA.

— Ajai Kumar Shukla

Margin

NIM Margin · Ongoing · High confidence 3.6% to 3.7%

So we continue to maintain the guidance of NIM between 3.6% to 3.7%.

— Vinay Gupta

Market Share

Affordable and Emerging Market share of retail book Market Share · Ongoing · High confidence 45% to 50%

Yes, so currently we are 39% and we are expecting this to grow in the range of 45% to 50%.

— Ajai Kumar Shukla

Profitability

Credit cost (normalized) Profitability · FY27-28 onward · High confidence 20 to 25 bps

So FY27, I think it would be. we are expecting if I talk about next year from FY27-28 onward, it would be in the range of 20 to 25 bps credit cost.

— Ajai Kumar Shukla

What to watch in Q4 FY26

Affordable Segment Disbursement Growth

Q4 FY26

Current 15% Y-o-Y drop, 4.5% QoQ decline

Target Revert back to growth trajectory (20-25% QoQ)

Why it matters

Indicates successful recalibration of strategy and recovery in a key growth segment.

As this impacted pocket stabilises, we expect affordable disbursement to revert back to growth trajectory of Q4 FY26.

Risks & concerns

Impact of MFI ordinance and recalibration in affordable segment
medium

Government ordinance in southern markets led to a 15% YoY drop in affordable disbursements, requiring strategic adjustments.

Management acknowledged
Competition and pricing pressure
medium

Industry-wide competition, especially in Prime segment due to rate cuts, but PNB Housing maintains margins through risk-based pricing and focus on self-employed.

Analyst acknowledged
Higher risk profile from Construction Finance and Emerging Developer Finance
medium

These segments are inherently riskier, but the company plans to grow them in a calibrated way (5-7% of total book) with strong policies.

Analyst acknowledged
Run-off pressure and BT outs
medium

Higher BT outs due to softening interest rates, an industry-wide challenge, impacting repayment rates.

Management acknowledged

Q&A highlights

7 direct

Recalibration of Affordable Book Strategy Direct

As far as Affordable book is concerned, we saw some challenges especially in some part of southern market. It was not all across India. So, we recalibrated our strategy in those markets. This was primarily because of some government ordinance and that is already out.

Explains the 15% YoY drop in affordable disbursements and outlines the company's adaptive strategy to regulatory changes (MFI ordinance) in specific geographies like Tamil Nadu.

Asked by Abhijit Tibrewal

Fraud Account Disclosure Direct

So, as far as this fraud which we reported, as you rightly said that we already written-off this account in 2022-23. And there is no material adverse effect on financial of the company.

Clarifies that the recently disclosed fraud account had already been written off in FY23, mitigating concerns about immediate financial impact, though the technical reason for late declaration as fraud is noted.

Asked by Abhijit Tibrewal

New MD's Vision and Strategy Direct

We'll focus on our Emerging and Affordable business. So, there will not be much change in the strategy of the organization. We'll continue and we'll further improve and explore the opportunities where we can get the better yield and NIM.

Provides insight into the new MD's strategic priorities, confirming continuity in focusing on high-growth, higher-yield segments and maintaining portfolio quality.

Asked by Viral Shah

NIM Trajectory and New Business Segments Direct

Post Q4, we will recalibrate, looking at, once the stability happens on repo, how it is going to play out in the next year. And once we launch CF, once we launch this Developer Finance, I think these will obviously add on to our overall yield profile. So next year, probably we might see, some expansion once these new segments start delivering.

Management indicates potential NIM expansion in the next fiscal year driven by the launch of Construction Finance and Developer Finance, which are expected to offer higher yields.

Asked by Viral Shah

ROA Aspirational Target and Credit Cost Normalization Direct

So FY27, I think it would be. we are expecting if I talk about next year from FY27-28 onward, it would be in the range of 20 to 25 bps credit cost.

Provides a long-term outlook on credit costs post-recovery benefits, which is crucial for assessing the sustainability of ROA targets.

Asked by Kunal Shah

Risk Profile of Construction Finance and Emerging Developer Finance Direct

So, yes, definitely the construction finance business is always a riskier business in the market. But I think the kind of policy and underwriting standard we have set, I think we will be sail through easily...

Addresses concerns about the increased risk profile from new business segments, with management emphasizing robust underwriting standards and a capped growth strategy (5-7% of total book).

Asked by Nischint Chawathe

Explanation for Yield Decline Direct

out of this 25 or 23 bps, 10 bps is on account of one large corporate account, which got foreclosed at the end of previous quarter. So, since the book mix between retail and corporate has gone down, and that was a large account of around INR 340 crores. So that got foreclosed.

Provides a clear, specific reason for a significant portion of the yield decline, attributing it to a one-off corporate account foreclosure, which helps differentiate between structural and temporary impacts.

Asked by Nidhesh

PMAY 2.0 Impact on Disbursement Volumes Partial

So, PMAY 2.0 is not, see, it is just started. So, because the pool is building up now, till now. If I say the ballpark number, it would be the subsidy, which we customer have got is around in the range of INR 7 crores to INR 8 crores, which subsidy has been given.

Management indicates that PMAY 2.0 is still in early stages and its impact on disbursement volumes is not yet significant, suggesting it's not an immediate game-changer but has long-term potential.

Asked by Himanshu Taluja

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Overview

PNB Housing Finance reported a total loan book of INR 82,203 crores as of December 31, 2025, marking a 14% YoY growth. The retail loan book, a key focus, grew by 16% YoY to INR 81,931 crores. Asset Under Management stood at INR 86,048 crores, and the company now services over 3.6 lakh accounts.

Asset Quality and Profitability

The company demonstrated improved asset quality with Gross NPA declining to 1.04% as of December 31, 2025, from 1.19% a year prior. Net Interest Margin (NIM) remained stable at 3.63% for the quarter, while Return on Asset (ROA) improved to 2.57% (annualized for 9M FY26) and Return on Equity (ROE) reached 12.31% (annualized for 9M FY26). PAT for the quarter was INR 520 crores, up 7.7% YoY.

Disbursement Trends and Segment Focus

Overall retail segment disbursement grew by 16% YoY to INR 6,217 crores in Q3 FY26. While the Affordable segment saw a 15% YoY drop in disbursements due to strategic recalibration in certain geographies impacted by government ordinances, the Emerging Markets segment showed strong growth of 25% YoY. The Prime segment also grew by 20% YoY. The company aims to revert affordable disbursements to growth trajectory in Q4 FY26.

Cost of Funds and Yield Dynamics

The cost of borrowing improved by 19 basis points sequentially to 7.50% in Q3 FY26, with incremental cost at 7.2%, driven by negotiations with banks and repo rate cuts. However, the overall yield declined to 9.72% from 9.95% in Q2 FY26, primarily due to the foreclosure of a large corporate account (impacting 10 bps) and lower disbursement yields.

Strategic Expansion into New Segments and Branch Network

PNB Housing plans to diversify its portfolio by launching Construction Finance and Emerging Developer Finance. These new segments are expected to contribute 8-10% of the total book, with average ticket sizes of INR 25-30 crores for Emerging Developer Finance, aiming to improve overall yield and NIM. The company also plans to add 40-50 new branches annually, focusing on Tier 2 and Tier 3 cities, with 35-40 new branches expected to be operational in Q1 FY27.

Impact of MFI Ordinance and PMAY 2.0

The MFI ordinance in southern markets, particularly Tamil Nadu, led to a temporary recalibration of the affordable business strategy, causing a dip in disbursements. However, the situation is stabilizing, and the company expects to resume growth. PMAY 2.0 is currently in its early stages, with limited impact on disbursement volumes (INR 7-8 crores in subsidies given so far), but is seen as a long-term growth driver.

This is an AI-generated summary of a publicly available earnings call transcript.

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