IPO Note ‘SUBSCRIBE’ to PNB Housing Finance Limited (PNBHFL)
About PNB Housing Finance (PNBHF)
PNB Housing Finance Limited (housing
GNP) is a housing finance company registered with the National Housing Bank
(NHB). It was incorporated under the Companies Act, 1956 and commenced
operations on November 11, 1988. PNB Housing is a subsidiary of Punjab National
Bank (PNB), which holds 51% equity of the Company. The Company has no
subsidiaries.
In December 2009, it entered into a
strategic financial partnership with Destimoney Enterprises Private Limited. In February 2015, the majority shareholder of DEPL Destimoney Enterprises
Limited transferred all its participation in Quality Investments Holdings,
which is owned by Carlyle Group, a global investment company.
read more at PNBHF official site>>>
PNB Housing Finance (PNBHF): Current Scenario
PNB Housing Finance (PNBHF) in terms of
loan portfolio size is the 5th fastest growing housing finance company (HFC) of
India. Its loan portfolio grew at a CAGR of 61.8% ~ (3.3x the growth of the
industry) of ~ Rs 3,900 Cr in FY12 to ~ Rs 27.170 Cr in FY16. Housing and non
housing loans up ~ 70% and ~ 30%, respectively, of its loan portfolio. Retail
mortgages represent ~ 87% of housing loans, while the construction financing
for developers constitutes the remainder. Non-housing loans include loan
against property, local loans, lease discount and business loans, accounting for
~ 61%, ~ 13%, ~ 15% and ~ 11%, respectively. It has the quality of healthy assets
as GNPA & NNPA report of FY16 was 0.22% and 0.14% respectively, are the
lowest in the industry. Its ratio of capital adequacy for FY16 is ~ 12.7%. It
was also the second largest deposit base among the public only after HFC HDFC.
Important Notes;
- Price Band: Rs.750-775
- Issue Opens: 25thOct 2016
- Issue Closes: 27th Oct 2016
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Purpose of the issue
Company intends to use the net proceeds
from the IPO to increase its capital base in order to meet future capital
requirements. This fund awareness improves its current capital adequacy ratio
of 12.68%. In accordance with the regulatory requirement, Tier I and II capital
HFC put together should not be less than 12%. Moreover, part of the capital
raised would also be used to expansion of the distribution network.
IIFL point of view
The loan book PNBHF increased to 61.8%
CAGR over FY12-FY16. However, IIFL expects the growth momentum to continue, but
at a moderate pace. Going before, its scalable business model, the quality of
assets of higher quality, lower borrowing cost and operating on medium term
leverage advantage will help improve its ROA. At the upper end of the issue
price ranges, i.e. Rs.775, the stock is available in a pre-issuance P / BV
multiple of 4.6x and post-issuance P / BVX 2.5x on FY16 book value. IIFL believes
that the assessment requested by the company justified given the strong growth
prospects. IIFL recommends a‘SUBSCRIBE’ to the issue.
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