Motilal Oswal Sees Big Upside for PNB Housing Finance, Sets ₹1250 Target

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AuthorAnanya Iyer|Published at:
Motilal Oswal Sees Big Upside for PNB Housing Finance, Sets ₹1250 Target
Overview

Motilal Oswal has issued a BUY recommendation for PNB Housing Finance, setting a target price of ₹1250. The brokerage cited leadership stability following the appointment of a new MD & CEO as key to executing medium-to-long-term growth plans. PNBHF is expected to sustain growth and asset quality while shifting towards higher-yielding segments, with forecasts projecting significant loan and PAT CAGR and improved return metrics by FY28.

Leadership Stability and Strategic Shift

Motilal Oswal's research highlights renewed confidence in PNB Housing Finance (PNBHF) following the appointment of Mr. Ajai Shukla as Managing Director & CEO. His prior experience as Chief Business Officer-Retail at Tata Capital Housing Finance is expected to bring crucial leadership stability, enhancing the company's execution capabilities. This move bolsters PNBHF's ability to meet its medium- to long-term growth objectives.

The firm is demonstrating resilience, navigating a challenging environment characterized by regional disruptions, intensified competition from banks, and Net Interest Margin (NIM) pressure. Despite these headwinds, PNBHF is maintaining growth and asset quality. A strategic shift towards higher-yielding business segments is also underway, aiming to bolster profitability and market positioning.

Financial Projections and Valuation

Motilal Oswal projects a robust financial trajectory for PNB Housing Finance, forecasting a Compound Annual Growth Rate (CAGR) of approximately 19% in loans and 15% in Profit After Tax (PAT) between FY26 and FY28. The brokerage anticipates Return on Assets (RoA) and Return on Equity (RoE) to reach around 2.4% and 13.1%, respectively, by FY28.

At its current valuation of 1.2 times Price-to-Book Value (P/B) for FY27, PNBHF presents an attractive investment opportunity with significant upside potential. The brokerage reiterates its BUY rating, establishing a target price of INR 1,250. This target is based on a multiple of 1.4 times projected Book Value Per Share (BVPS) for December 2027, signaling strong conviction in the company's future performance.

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