PNB Housing Finance issue revives IPO frenzy on Dalal Street

By Devangi Gandhi & Joel Rebello

Mumbai: PNB Housing Finance will open its public share sale on October 25 aiming to raise Rs 3,000 crore in what will be the secondlargest issue in 2016. The company has set a price band at Rs 750-775 per share valuing it at close to Rs 13,000 crore. With a loan book of Rs 27,201 crore, PNB Housing Finance is the fifth-largest housing finance company in India -a market which has a mortgage-to-GDP ratio of less than 10%, a young demography and a housing short age. After listing, PNB Housing Finance will join its listed home finance peers in the local stock market. Here is a comparison:

Loan Book

PNB Housing's loan book at Rs 27,201 crore as of March 2016 is just more than 10% of the Rs 2.59 lakh crore loan book of HDFC, the largest home finance company, but it is higher than Gruh Finance and Can Fin Home. It means that the company has a lot of scope to grow.

Valuation

PNB Housing's price to book ratio at 2.35 to 2.50 is more expensive than some like DHFL (1.75) but it is still cheaper than a Can Fin Home (5.50) or Gruh Finance (12.80) of even HDFC (4.40).

Retail Loans

Home loans to individuals, which is the least risky in this business, make up 67% of PNB Housing's loan book which is lower than HDFC's 73%, DHFL's 72% or even Indiabulls 77%. In that sense PNB's retail loan book is still low.

Asset Quality

PNB Housing's asset quality is the best among housing finance companies with gross NPAs at 0.22%, lower than DHFL's 0.93%, or even HDFC's 0.70%. This clean asset quality is one of the salient points for this share sale.