PNB Housing Finance shares fall 2% amid block deal; Carlyle likely seller

Shares of PNB Housing Finance, a subsidiary of Punjab National Bank, dropped over 2% in opening trade on Tuesday amid strong volume, with 3.4 crore shares changing hands over the counter compared to two-week average of 0.63 lakh stocks. Private equity firm Carlyle was reportedly looking to sell up to 6.4% stake in the state-owned housing finance company through block deals today.

U.S.-based Carlyle through its entity, Quality Investment Holdings, plans to sell 1.66 crore shares, or 6.4% stake, at a floor price of ₹775 apiece, aiming to raise ₹1,256 crore, as per the report. The floor price for the block deal at a 2.3% discount compared to Monday's closing price of ₹793.35 on the BSE.

Motilal Oswal Investment Advisors Ltd and IIFL Securities are acting as the book-running brokers for the transaction.

Amid block deal buzz, PNB Housing shares opened lower at ₹781.60 against the previous closing price of ₹794.20 on the BSE. In the opening trade, the housing finance stock declined as much as 2.4% to ₹775, while the market capitalisation slipped to ₹20,349 crore.

PNB Housing shares touched its 52-week high of ₹913.95 on January 25, 2024, and a 52-week low of ₹598.05 on August 2, 2023. In the last one year, the stock has risen 24%, while it rose over 3% in the past six months. In the calendar year 2024, the stock has given flat returns, while it lost nearly 2% in a month.

Last week, PNB Housing Finance released its June quarter earnings reports, posting 24.6% growth in its consolidated net profit at ₹432.81 crore as compared to ₹347.32 crore in the year-ago period. The total revenue of the company climbed 7.3% to ₹1,832.08 crore versus ₹1,707.72 crore in Q1 FY24.

The total interest income of the bank was at ₹28,556 Crore for Q1 FY25, up 13.6% compared to ₹25,145 crore in the same period last year. Fee based income stood at ₹2,077 crore as against ₹1,785 crore for Q1 FY24, recording a growth of 16.3% on YoY basis.

On the asset quality front, gross non-performing assets (GNPA) declined to ₹51,263 crore as on June’24 from ₹70,899 crore as on June’23. Similarly, net non-performing assets (NNPA) dipped to ₹5,930 crore from ₹17,129 crore in the same period last year. In percentage terms, GNPA was 1.35% versus 3.76% in Q1 FY24 and 1.50% in Q4 FY24, while NNPA stood at 0.92% versus 2.59% in the year ago period and 0.95% in the March quarter of FY24.

Post Q1, JM Financial has maintained ‘BUY’ call on the stock with a revised target price of ₹1,200 from ₹970 earlier. “We believe that strong growth trajectory led by affordable and emerging markets and corporate disbursements; steady branch expansion; govt’s PMAY infusion; and consistent recoveries from its write-off pool while maintaining asset quality would aid in would aid in healthy RoA of 2.6% by FY26E,” it says in a report.

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