PNB Housing Finance, the fifth largest HFC in India by loan and claim to having second largest amount of public deposits in an HFC in India, has received capital markets regulator Sebi’s approval to raise Rs 3,000 crore through an initial public offering. The company is promoted by Punjab National Bank (“PNB”), one of the large nationalized banks in India. The price band of Rs. 750-775 appears steep and a quick peer comparison based is given below to assess its financial strengths vis a vis other major players. PNB holds 51% in PNB Housing Finance and 49% is held by Carlyle Group which is one of the world’s largest and well known investment firm.
Detailed IPO Analysis Link: https://ipoandmore.com/2016/10/18/pnb-housing-finance-ipo-analysis/
Issue date: 25 to 27 Oct 2016
Price Band – Rs. 750 – 775
Table 1: Peer Group I- PNB Housing Finance vs Other HFCs (updated 19/10/2016)
* PNB Housing figures are based on pre issue equity. Post IPO figures for PNB Housing are given at Table 3.
| Company | PNB Hsg* | HDFC | LIC Hsg | IBulls Hsg | DHFL |
| Revenue | 2699.543 | 55351.24 | 12809.94 | 8483.13 | 7617.87 |
| Face Value | 10 | 2 | 2 | 2 | 10 |
| Opr Profit | 2460.73 | 33140.49 | 12167.62 | 8390.73 | 6899.8 |
| OPM | 0.9115 | 0.5987 | 0.9499 | 0.9891 | 0.9057 |
| Net Profit | 327.566 | 10782.89 | 1686.5 | 2421.24 | 757.32 |
| NPM | 0.1213 | 0.1948 | 0.1317 | 0.2854 | 0.0994 |
| Share Capital | 126.923 | 315.97 | 101 | 84.26 | 291.8 |
| Net worth | 2144.5 | 50818.73 | 9145.98 | 10503.83 | 4892 |
| EPS | 25.81 | 68.25 | 33.4 | 57.47 | 25.95 |
| Market /Issue Price | 775 | 1342 | 615.65 | 880.65 | 334.65 |
| RONW | 15.27% | 21.22% | 18.44% | 23.05% | 15.48% |
| NAV | 168.96 | 338.49 | 189.32 | 263.8 | 174.55 |
| P/E | 30.03 | 19.66 | 18.43 | 15.32 | 12.9 |
| P/BV | 4.59 | 3.96 | 3.25 | 3.34 | 1.92 |
| Return on Equity | 17.60% | 21.26% | 19.58% | 27.00% | 15.32% |
| Interest Coverage | 1.32 | 1.6 | 1.27 | 1.63 | 1.2 |
| CAGR sales 3 yrs | 59.42% | 13.97% | 17.71% | 23.80% | 21.65% |
| CAGR Sales 1 yr | 51.63% | 11.43% | 15,34% | 27.09% | 22.76% |
| CAGR NP 3 Yr | 52.25% | 15.35% | 17.52% | 23.15% | 18.04% |
| CAGR NP 1 yr | 68.79% | 18.57% | 16.63% | 17.23% | 16.98% |
| NPA | 0.14% | 0.00% | 0.22% | 0.35% | 0.93% |
Table 2 :Peer Group II- PNB Housing Finance vs Other HFCs
| Company | PNB Hsg | Gruh Fin | Repco | Canfin | GIC Hsg |
| Revenue | 2699.543 | 1150.64 | 927.73 | 1150.64 | 906.66 |
| Face Value | 10 | 2 | 10 | 10 | 10 |
| Opr Profit | 2460.73 | 1063.36 | 823.25 | 1063 | 817.26 |
| OPM | 0.9115 | 0.9241 | 0.8874 | 0.9238 | 0.9014 |
| Net Profit | 327.566 | 263.72 | 159.38 | 174.74 | 128.57 |
| NPM | 0.1213 | 0.2292 | 0.7274 | 0.1519 | 0.1418 |
| Share Capital | 126.923 | 72.74 | 62.54 | 26.62 | 53.88 |
| Net worth | 2144.5 | 835.3 | 954.83 | 878.04 | 731.8 |
| EPS | 25.81 | 7.25 | 25.48 | 65.64 | 23.86 |
| Market /Issue Price | 775 | 339.1 | 780 | 1824 | 347.2 |
| RONW | 15.27% | 31.57% | 16.69% | 19.90% | 17.57% |
| NAV | 168.96 | 26.31 | 158.96 | 348.5 | 141.9 |
| P/E | 30.03 | 46.77 | 30.61 | 27.79 | 14.55 |
| P/BV | 4.59 | 12.89 | 4.91 | 5.23 | 2.45 |
| ROE | 17.60% | 31.49% | 16.99% | 19.03% | 17.89% |
| Interest Coverage | 1.32 | 1.49 | 1.42 | 1.36 | 1.32 |
| CAGR sales 3 yrs | 59.42% | 25.31% | 29.51% | 40.25% | 16.53% |
| CAGR Sales 1 yr | 51.63% | 18.84% | 26.03% | 30.23% | 17.95% |
| CAGR NP 3 Yr | 52.25% | 18.63% | 23.33% | 42.64% | 13.55% |
| CAGR NP 1 yr | 68.79% | 19.43% | 24.03% | 75.81% | 21.46% |
| NPA % | 0.14% | 0.09% |
Table 3 : PNB Housing Finance – Post IPO Figures
| Company | PNB Hsg (Post IPO) |
| Revenue | 2,699.54 |
| Face Value | 10 |
| Opr Profit | 2,460.73 |
| OPM | 91.15% |
| Net Profit | 327.57 |
| NPM | 12.13% |
| Share Capital | 167 |
| Net worth | 5345 |
| EPS | 19.61 |
| Market /Issue Price | 775 |
| RONW | 6.13% |
| NAV | 320 |
| P/E | 39.52 |
| P/BV | 2.42 |
A look at CAGR figures for sales and Net profit reveal good very aggressive growth by PNB Housing Finance in last few years even as promoter PNB does not enjoy much confidence of markets but backing of Carlyle Group , one of the world’s largest and successful investment firms is a big plus.
At the upper end of price PNB Housing Finance is asking for P/BV ratio of 4.5 & PE ratio of 30.79 . both P/BV and PE ratio are higher than other HFCs. However the IPO will have to be evaluated on its HY 2016 performance which is likely to be better.
For Q1Fy17 PNB Housing Finance is reported to have made a net Profit of 96 Crore.
Standard disclaimer: I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.
Please comment on ICICI PRU LIFE INSURANCE IPO
dear sir,
many thanks for your analysis. but the price brand is too expensive to apply as one can get DHFL, CANFIN etc. in the secondary mkt. at a cheaper valuation.
looking for your early reply.
DEAR SIR,
MANY THANKS FOR YOUR RESEARCH REPORT. PL. KEEP IT UP