💰 Financial Performance

Revenue Growth by Segment

The retail loan book grew 17% YoY to reach INR 79,440 Cr in Q2 FY26, while the total loan book grew 15% YoY to INR 79,771 Cr. Within disbursements, the Affordable segment grew 31% YoY (INR 828 Cr) and the Emerging segment grew 23% YoY, together contributing 50% of total retail disbursements. The Prime segment grew 2% YoY to maintain steady margins.

Geographic Revenue Split

The company operates in 21 states/Union Territories across 130+ high-potential districts. While specific regional revenue percentages are not disclosed, the company added 40 new branches in Q2 FY26, bringing the total to 198 operational branches in 15 states, with a strategic focus on deeper penetration into Tier 3 and Tier 4 markets to drive higher yields.

Profitability Margins

Profitability has shown a steady upward trend with Return on Managed Assets (RoMA) improving to 2.73% in Q2 FY26 from 2.3% in FY25 and 2.0% in FY24. Net Interest Margin (NIM) remained healthy at 3.7% for H1 FY26, despite competitive pressures, while the gross margin stood at 4.11% in FY25 compared to 4.02% in FY24.

EBITDA Margin

Profit After Tax (PAT) for FY25 stood at INR 1,936.14 Cr, a 28.4% YoY increase from INR 1,508 Cr. For H1 FY26, PAT reached INR 1,115 Cr. This growth is driven by a 15% increase in retail net interest income and a 25% growth in fee and commission income resulting from higher disbursement volumes.

Capital Expenditure

The company is aggressively investing in physical infrastructure, expanding its branch network by 18.67% to 356 branches in FY25. Specifically, 'Roshni' (Affordable Housing) branches grew 25% to 200 units, with a target to reach 250 branches by the end of the current fiscal year to support the 17-18% loan book growth guidance.

Credit Rating & Borrowing

PNB Housing holds an AA+ (Stable) credit rating. The average cost of borrowing declined by 7 bps sequentially to 7.69% in Q2 FY26, down from 7.76% in Q1 FY26. The incremental cost of funds for FY25 was 7.81%, supported by a diversified mix including NHB sanctions of INR 5,000 Cr and an ECB sanction of USD 350 million.

⚙️ Operational Drivers

Raw Materials

As a financial institution, the primary 'raw material' is capital. The cost of borrowing (7.69%) represents the main input cost. The funding mix is diversified: Banks (significant portion), National Housing Bank (NHB), Deposits, and External Commercial Borrowings (ECB).

Import Sources

Not applicable for a housing finance company; however, the company sources international capital through ECB sanctions, such as the USD 350 million facility secured in FY25.

Key Suppliers

Key capital providers include the National Housing Bank (NHB), which provided INR 5,000 Cr in sanctions, and various commercial banks for term loans and working capital lines of INR 9,239 Cr.

Capacity Expansion

Current operational capacity is 356 branches as of FY25. The company is expanding its 'Roshni' affordable housing vertical to 250 branches by the end of FY26. The retail loan asset capacity grew 16% YoY to INR 75,765 Cr in FY25.

Raw Material Costs

Interest expenses are the primary cost. Net interest income grew 9% overall, but 15% for the retail segment in FY25. The company focuses on reducing the cost of borrowing (down 7 bps to 7.69% in Q2 FY26) through bank negotiations and repo rate pass-throughs.

Manufacturing Efficiency

Operational efficiency is measured by the Cost-to-Income ratio, which was 24.58% in FY25. The company uses Straight Through Processing (STP) for salaried segments to enhance turnaround time and quality metrics.

Logistics & Distribution

Distribution is handled through its 356-branch network and digital channels. Operating expenses as a percentage of managed assets remain a key monitorable as the company scales its newer AHF and EM verticals.

📈 Strategic Growth

Expected Growth Rate

17-18%

Growth Strategy

Growth will be achieved by prioritizing the high-yielding Affordable (Roshni) and Emerging Market segments, which grew 34% YoY. The company plans to reach 250 Affordable housing branches by year-end and selectively re-enter the corporate finance space with ticket sizes of INR 100-200 Cr, while keeping the corporate book under 10% of the total portfolio.

Products & Services

Individual Home Loans (IHL), Non-Home Loans (NHL) including Loan Against Property (LAP), Construction Finance (CF), and Corporate Term Loans.

Brand Portfolio

PNB Housing Finance, Roshni (Affordable Housing segment).

New Products/Services

Selective re-entry into Corporate Finance/Construction Finance with a calibrated approach focusing on smaller ticket sizes (INR 100-200 Cr) to diversify the book while maintaining a retail-centric focus.

Market Expansion

Expansion into Tier 3 and Tier 4 markets in 15 states, with recent branch additions in Rajasthan, Tamil Nadu, and Andhra Pradesh to capture higher-yielding business.

Market Share & Ranking

Not explicitly ranked, but the 'Roshni' segment reached a book size of INR 5,000 Cr within two years, making it one of the fastest-growing in the affordable housing segment.

Strategic Alliances

The company maintains a strategic brand partnership with Punjab National Bank (PNB), paying a royalty fee for the brand name as PNB's stake is 28.1%.

🌍 External Factors

Industry Trends

The housing finance industry is shifting toward affordable housing and semi-urban markets. PNBHFL is positioning itself by increasing the share of AHF and EM segments to sustain margins against intense competition from banks in the Prime segment.

Competitive Landscape

Faces intense competition in the Prime housing segment from commercial banks, which puts pressure on yields. PNBHFL counters this by focusing on the self-employed (41% of sourcing) and informal segments where banks have lower penetration.

Competitive Moat

The primary moat is the 'PNB' brand heritage and the specialized 'Roshni' vertical. Sustainability is supported by a strong Capital Adequacy Ratio (CRAR) of 29.8%, providing a buffer for aggressive growth in higher-risk, higher-reward segments.

Macro Economic Sensitivity

Highly sensitive to interest rate cycles and repo rate changes. A 10 bps rate pass-through was implemented in the recent quarter to manage yields amidst a 7 bps decline in borrowing costs.

Consumer Behavior

Increasing demand in Tier 3/4 markets for smaller ticket sizes; 96% of fresh sanctions are now below INR 1 Cr, reflecting a shift toward middle-income and affordable housing demand.

Geopolitical Risks

Limited direct exposure as a domestic lender, but macro-economic shifts affecting domestic liquidity conditions impact the ability to maintain the INR 6,846 Cr on-book liquidity buffer.

⚖️ Regulatory & Governance

Industry Regulations

Regulated by NHB/RBI. Key compliance metrics include a CRAR of 29.8% (vs regulatory minimum) and a Liquidity Coverage Ratio of 169%. The company must also manage the transition following the MD & CEO's resignation on October 28, 2025.

Environmental Compliance

The company follows an overarching ESG framework and is ranked in the top 3rd of the Diversified Financial Services industry in the S&P Global Corporate Sustainability Assessment.

Taxation Policy Impact

The effective tax rate is reflected in the difference between PBT (INR 2,485.77 Cr) and PAT (INR 1,936.14 Cr) for FY25, approximately 22%.

Legal Contingencies

The company manages a written-off pool of INR 1,000 Cr (INR 675 Cr corporate, balance retail). Recoveries from written-off accounts contributed INR 336 Cr in FY25, significantly aiding profitability.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the performance of the rapidly growing AHF and EM segments as the portfolio seasons. Asset quality in these segments is a key monitorable despite the current low GNPA of 1.0%.

Geographic Concentration Risk

The company is diversified across 15 states, but branch consolidation in non-profitable locations suggests ongoing optimization of geographic exposure.

Third Party Dependencies

High dependency on banking channels for funding and the PNB brand for financial flexibility and deposit mobilization.

Technology Obsolescence Risk

The company is mitigating this through investments in 'Straight Through Processing' and digital onboarding to maintain a competitive turnaround time (TAT).

Credit & Counterparty Risk

Credit risk is managed by focusing on high-quality borrowers; 84% of incremental business has bureau scores >700, and the corporate book has been reduced to just 1.3% of total loan assets to minimize wholesale exposure risks.