PNB Housing's Block Deal Sees 5.2% Equity Change; Stock Slips 4%

On 20 June, PNB Housing Finance share price dropped sharply by over 4% to ₹801 per share. This decline followed a block deal where approximately 1.36 crore shares equivalent to 5.2% of the company's equity changed hands in multiple transactions.

Sources suggest that entities like General Atlantic and Asia Opportunities Fund were likely the sellers in this block deal although exact details of the buyers remain undisclosed at this time. Reports indicated that both Asia Opportunities V (Mauritius) and General Atlantic Singapore Fund FII Pte were looking to sell around 5.4 million shares each with a floor price set at ₹773 per share a markdown of 8% from the previous closing price of ₹840.

Asia Opportunities V held a 9.88% stake in PNB Housing as of the March quarter while General Atlantic Singapore Fund held 9.22%. Following this stake sale there will be a lock in period of 60 days before further transactions can occur.

UBS was appointed as the broker for this block deal highlighting the handling of the transaction.

Financial Performance and Analyst Insights

In March ending PNB Housing reported a 57.3% yoy increase in consolidated net profit amounting to ₹439 crore. Meanwhile consolidated net interest income grew by 7.2% year on year to ₹623 crore.

Analysts from JM Financial maintained a buy recommendation on PNB Housing with a target price of ₹970 per share. They highlighted factors such as balanced growth, improved infrastructure, expanding margins and controlled operating expenses which they believe will support the company in achieving healthy Returns on Assets (RoAs) of 2.5% by FY26.

The management of PNB Housing expressed confidence in maintaining strong asset quality and aims to reduce Gross Non Performing Assets (GNPA) to 1% by the end of FY25 down from 1.45% in FY24. They anticipate benign credit costs moving forward, supported by expected recoveries from a write off pool totaling ₹2,300 crore.

Market Performance and Outlook

Over the past three months PNB Housing shares have surged by more than 31%outpacing the 8% rise in the benchmark Nifty 50 index. The stock previously reached a 52 week high of ₹913 per share on January 25, 2024.

Investors and analysts are closely monitoring developments in PNB Housing, particularly amidst strategic stake sales and the company's proactive measures to enhance financial metrics and operational efficiency.