PNBHOUSING

Q2 FY26 Summary & Strategic Outlook

-Resilient fundamentals, expanding retail mix, and scope for re-rating: 🔹 Leadership Transition & Stock Recovery - The sudden exit of the MD & CEO in July triggered a sharp correction in the stock. - Despite the uncertainty, the stock has rebounded, reflecting investor confidence in the company’s core fundamentals. 🔹 Retail Disbursement Momentum - Disbursement growth accelerated in Q2, led by emerging prime and affordable segments, which now contribute 50% to retail disbursements. - Core prime mortgage growth remains range-bound, but new verticals are gaining traction through deeper penetration in small towns and informal/self-employed borrower segments. 🔹 Loan Book & Credit Strategy - Overall loan book growth remains healthy, with FY26 guidance maintained at 17–18%. - A revamped corporate credit policy supports selective growth and diversification. - Spreads improved due to lower borrowing costs, though lending yields dipped slightly due to pricing pressure from expansion. 🔹 Profitability & Margin Outlook - Net interest margins (NIMs) are expected to remain steady in the 3.2–3.6% range, supported by high-yield product focus and branch expansion. - Operating efficiency improved, with a better opex-to-asset ratio and positive operating leverage. - Credit cost write-backs will further support profitability over the next 2–3 quarters. 🔹 Asset Quality Trends - GNPA ratio improved, reflecting strong collections and quality growth focus. - A spike in 30+ DPD was observed due to seasoning in the affordable loan book, but overall delinquencies remain below industry average. - Recoveries from the written-off pool continue to aid bottom-line performance. 🔹 Strategic Positioning & Growth Drivers - The rising share of informal (35–40%) and self-employed (45–50%) borrowers will enhance yield potential. However, asset quality in these segments needs close monitoring. - The stock trades at 1.0x FY28 estimated book value, below peer averages.