India: PNB Housing Finance shares debut in the stock market with 11.4% premium

Image sourced from PNB Housing website

Shares of PNB Housing Finance Ltd debuted 11.4% premium on its listing day on Monday after its issue was subscribed 29.5 times for the Rs.3,000-crore initial public offering (IPO) last week.

The stock opened at Rs.863 a share and touched a high and a low of Rs.902 and Rs.860.05, respectively.

At 10.10am, the script was trading at Rs.901 on BSE, up 16.26% from its issue price of Rs.775. India’s benchmark Sensex Index rose 0.79% to 27,488.30 points.

“Going forward we expect growth rates to moderate from current trajectory but still remain faster than the industry averages in the medium term. With likely improvement in spreads with the capital raising coupled with benefits of operating leverage accruing the ROAs could expand further. However, with fall in leverage ROEs could dilute in the near term. At current valuations, the stock could provide healthy returns in the medium term given the strong growth potential at its current size” said Emkay Research on 24 October said in a note to its investors.

Its arm Punjab National Bank was trading at Rs.137.85 on BSE, 5% from its previous close after the bank reported improvement in its, both on terms of absolute numbers and percentages, asset quality when compared to the immediate preceding quarter. Gross NPA stood at 13.63% while net NPA stood at 9.1%. It reported a net profit of Rs.549 crore in the second quarter of the current fiscal, a fall of 11% from the Rs.621 crore profit recorded in the corresponding year-ago period.

Its rivals, Housing Development Finance Corp Ltd fell 0.4%, LIC Housing Finance Ltd rose 3%, Can Fin Homes Ltd fell 0.3%, GIC Housing Finance Ltd rose 3%, Repco Home Finance Ltd fell 1.3%, Gruh Finance Ltd rose 2.2%, Indiabulls Housing Finance Ltd rose 2.2%,

The issue, which opened during 25-27 October, received 37.3 times subscription from institutional investor category, while the non-institutional category, comprising high networth individuals, received bids for 86.1 times the portion reserved for the category. The portion set aside for retail investors, whose investments cannot exceed Rs.2 lakh per individual, was subscribed 1.29 times.

On 25 October, the lender raised Rs.894 crore from anchor investors including private equity firm General Atlantic, Kuwait Investment Authority, Singapore sovereign wealth fund GIC and insurance companies were among the 45 investors. Other names of investors are SBI Life Insurance, HDFC, Axis MF, IDFC, Franklin Templeton MF and Nomura.

The IPO was entirely a fresh sale of shares. The home finance lender will use the proceeds from the share sale mainly to augment its capital base and for general corporate purposes.

Punjab National Bank (PNB) holds a 51% stake in its housing finance unit, founded in 1988 as a non-banking financial company. Private equity firm Carlyle Group owns the rest. Carlyle acquired the stake from Destimoney Enterprises Pvt. Ltd in February 2015.

In FY16, PNB Housing reported a net profit of Rs.327.60 crore, up 68.78% from a year ago. Net interest income rose 68.4% to Rs.683.8 crore. Provisions jumped 111.86% to Rs.78.60 crore. Gross non-performing assets stood at 0.22% from 0.2% a year ago, while net NPA was at 0.14% from 0.07%. Total advances grew 13.7% to Rs.29,140 crore.

“Given robust advances growth, best asset quality among peers and foray in the affordable category housing finance segment, the future outlook remains favourable”, said ICICI Securities in its 24 October note .

The housing finance firm has hired Kotak Mahindra Capital Co. Ltd, DSP Merrill Lynch Ltd, JM Financial Institutional Securities Ltd, JP Morgan India Pvt. Ltd and Morgan Stanley India Co. Pvt. Ltd to manage the IPO.

PNB Housing Finance has 48 branches and around 800 employees across northern, western and southern regions. About 40% of its business comes from north India, with south and west both contributing 30% each.

Also Read: India: PNB Housing Finance IPO subscribed 20% on Day 1

India: PNB Housing Finance IPO subscribed 57.7% on Day 2

India: IPOs of private equity-backed firms stuck despite buoyant market

This article was first published on Livemint.com

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Following vacancies can be applied for (only in Singapore).   

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  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.