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PNB Housing Fin RI review (May apply)

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•    PHFL is having parentage of PNB as a major shareholder.
•    The company is in the housing finance segment.
•    The company marked declining trends in its top line with inconsistent bottom lines.
•    Despite earning profits, it has not paid any dividends for the reported periods.
•    This RI offer is at a discount of nearly 38% to its last traded price of Rs. xx (11.04.2023)
•    Investors may lap it up for medium to long-term rewards.

PNB Housing Finance Ltd. (PHFL) is the fourth largest Housing Finance Company ("HFC") in India in terms of assets under management ("AUM") and the third largest Housing Finance Company in terms of deposits in India, as of March 31, 2022 (Source: CRISIL Report). As of December 31, 2022, its AUM aggregated to Rs. 65752.69 crores. It has been operating in the Indian housing finance industry for over three decades through the Pan-India network. 

PHFL's portfolio of products primarily consists of retail loans, which include a range of individual housing loans, loans against property, and non-residential premises loans. The portfolio also includes corporate loans (construction finance, lease rental discounting and corporate term loans). PHFL's promoter is Punjab National Bank ("PNB"), a nationalized bank and financial institution engaged in the business of providing a range of banking and financial services in India. As of the date of this Letter of Offer, PNB holds approximately 32.07% of fully diluted equity share capital including vested and unvested options.

As of December 31, 2022, it had 252,359 active customers, 99.98% of whom were retail customers. Commencing from Financial Year 2020, it has strategically focused on increasing its retail portfolio and has not made any fresh corporate loan sanctions. As a result, the proportion of retail loans to its total loan assets has gradually increased. Retail loan assets accounted for 91.54% of Loan Assets, as per Ind AS, as of December 31, 2022, as compared to 87.26% as of March 31, 2022, 81.01% as of March 31, 2021, and 78.36% as of March 31, 2020.

As of December 31, 2022, its Loan Assets aggregated to Rs. 58033.68 crores, as compared to Rs. 57894.88 crores as of March 31, 2022, Rs. 63188.83 crores as of March 31, 2021, and Rs. 68393.64 crores as of March 31, 2020. Its loan disbursements were Rs. 10470.48 crores, Rs. 11245.56 crores, Rs. 10444.53 crores, and Rs. 18625.53 crores in the nine months ended December 31, 2022, Financial Years 2022, 2021 and 2020, respectively. The decrease in disbursements between Financial Years 2020 and 2021 was primarily due to the strategic reduction of the corporate portfolio and the adverse impact of the COVID-19 pandemic.

As of December 31, 2022, PHFL's distribution network extended across 113 cities and 19 states and union territories. Its network also included 16,382 active channel partners (including deposit brokers). The channel partners include its in-house DSTs and other third-party channel partners, which include DSAs, deposit brokers and connectors. Its DSAs include proprietorships, professionals such as chartered accountants and consultants who, working under the supervision of its sales managers, provide advice to small businesses and recommend and identify prospective customers for PHFL and coordinate the submission of loan application documents. In the nine months ended December 31, 2022, 59.29% of its disbursements originated from DST, and 40.71% from 

The company is coming out with its Rights Issue (RI) offer of 90681828 equity shares of Rs. 10 each at a fixed price of Rs. 275 per share to mobilize Rs. 2493.76 cr.  The issue opens for subscription on April 13, 2023, and will close on April 27, 2023. The company is offering 29 shares for every 54 shares held to eligible stakeholders as of the record date of April 05, 2023. The full amount is to be paid along with the application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. 

PHFL is spending Rs. 46.70 cr. for this RI process and from the net proceeds, it will utilize Rs. 1875.00 cr. for augmenting the capital base, and Rs. 572.06 cr. for general corporate purposes.

The joint lead managers to this RI are Axis Capital Ltd., BNP Paribas, BofA Securities India Ltd. and J.P. Morgan India Pvt. Ltd. while Link Intime India Pvt. Ltd. is the registrar of the issue.

Post-RI, PHFL's current paid-up equity capital of Rs. 168.86 cr. will stand enhanced to Rs. 259.54 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 7137.29 cr. 

For the last three fiscals, PHFL has (on a consolidated basis) posted a total income/net profit of Rs. 8489.55 cr. / Rs. 646.24 cr. (FY20), Rs. 7624.08 cr. / Rs. 929.90 cr. (FY21), and Rs. 6200.73 cr. / Rs. 836.48 cr. (FY22). For the 3Qs of FY23, it earned a net profit of Rs. 766.72 cr. on a total income of Rs. 4891.94 cr. Thus while it posted declined top line, its bottom line marked inconsistency. 

As of December 31, 2022, its current paid-up equity capital of Rs. 168.86 cr. is supported with free reserves of Rs. 10538+cr. 

The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

The scrip last closed on cum-right basis at Rs. 541.80 on April 03, 2023, and opened on an ex-right basis at Rs. 451.95 on April 05, 2023. Since then, it has marked a high/low of Rs. 479.70 / Rs. 442.05. The scrip last closed at Rs. 443.65 as of April 11, 2023. For the last 52 weeks, it has posted a high/low of Rs. 541.72 / Rs. 258.34. 

The promoters' holding has been around 32.50% for the last three quarters ended on December 31, 2022. The counter is well managed above the RI price. 

Conclusion / Investment Strategy

The company is in the housing finance segment and it ranks in the first five mega players. Its top line marked declining trends, while the bottom line posted inconsistency. The segment is poised for bright prospects with rising volumes following the “Aawas for All” scheme from the Government of India. AS this RI is at a discount of nearly 38%, investors may lap it up for medium to long-term rewards.

Review By Dilip Davda on April 11, 2023

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

More PNB Housing Finance Limited RI Views / Analysis / Recommendations ...

The PNB Housing Finance Rights Issue Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if PNB Housing Finance Rights Issue worth investing. The PNB Housing Finance Rights Issue Note sets the Rights Issue expectations in systematic way which tells you if PNB Housing Finance Rights Issue good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in PNB Housing Finance Rights Issue by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.


2. IPO smart     Link|April 13, 2023 9:39:14 PM
My demat holding 19 shares since IPO allotment.
RE is 10 no.
can I apply for 726 nos shares?
1. arunARUN     Link|April 13, 2023 11:15:33 AM
I agree on conclusion