Graphic: Naveen Kumar Saini / Mint
PNB Housing Finance Ltd. managed to dispel some of the fears about its liquidity position by reporting the strong profits of the September quarter. Held by healthy growth of 43% in assets under management, the value of the mortgage loan registered a growth of the net profit of 33% and a growth of 25.4%.
Having said that, its disbursements decreased to 14% from 25% in the previous quarter, indicating that the value is not firm in terms of liquidity.
In fact, analysts believe that their disbursements may decrease further due to pressure on liquidity.
PNB Housing Finance has a breach of asset liability management (AMR) of ₹ 530 crore within a month to three months and a cumulative difference of ₹ 900 crore in less than a year of tenors. In other words, the company will have to approach the liquidity of ₹ 900 crore to keep the growth of its loan in progress.
Analysts at Jefferies India Pvt. Ltd. noted that the percentage of commercial documents (CP) in the overall GNP Housing Finance loan fell to 13% from 17%.
This, coupled with the fact that the value was able to raise more than ¥ 6,000 crore through CPs in the last month, should give comfort to investors.
However, the cost of loans increased and that would swallow the margins and the spreads. The management has spreads oriented to 205-215 basis points.
This leads us to the bad position of the loan. PNB Housing Finance had a pristine default rate and continues to do so. Your bad credit loans as a percentage of the credit book were only 0.45%.
This could be threatened because it has an exposure of ₹ 280 crore to Supertech Ltd, a distressed developer. The exhibition is classified as standard.
The non-residential loan book grew faster in 54%, led by loans against real estate and construction finance. While the loan book is diversified, the value saw a faster growth in the most risky part of the book.
The GNP Housing Finance stock suffered pressure from other NBFC (non-bank financial company) shares during September when liquidity problems affected NBFC.
The fall of 30% since September in the GNP housing stock has made the valuations modest and negotiates in a multiple of 1.7 times its estimated value in books for FY20.