UBS has a price target of ₹1,300 on shares of PNB Housing Finance, indicating a potential upside of 17% from Thursday’s closing levels.
The brokerage said that PNB Housing Finance is diversifying into emerging and affordable loan segments, which are a better fit for the company. Currently, prime loans make up 73% of its loan book and UBS expects that number to fall to 60% by financial year 2027, as non-prime loans rise to 40% of the total book.
“We expect PNB Housing to remain selective in prime loans and that the prime book will continue to contract,” UBS said.
An expansion into these new segments could aid PNB Housing’s Assets Under Management (AUM) to grow at a Compounded Annual Growth Rate (CAGR) of 16% over financial year 2025-2027, according to the note.
All of this would lead to PNB Housing’s Earnings Per Share (EPS) witnessing a 13% EPS CAGR over the same time frame, UBS wrote, adding that the company’s Return on Equity (RoE) could surge to over 13% by financial year 2028.
“At 1.4x financial year 2027 price-to-book value, we believe risk-reward is favourble as the stock trades at a discount to peers, despite robust loan growth and improving RoE profile,” UBS wrote in its note.
The brokerage also highlighted PNB Housing’s plan to expand to 500 branches by financial year 2027 from 356 currently.
All 13 analysts who have coverage on PNB Housing Finance have a “buy” rating on the stock.
Shares of PNB Housing Finance surged 2.7% on Thursday at ₹1,112. The stock has gained 7% in the last one month and has risen 23% so far this year.
