PNB Housing Finance, the fifth largest HFC in India by loan and claim to having second largest amount of public deposits in an HFC in India, has received capital markets regulator Sebi’s approval to raise Rs 3,000 crore through an initial public offering. The company is promoted by Punjab National Bank (“PNB”), one of the large nationalized banks in India. The price band of Rs. 750-775 appears steep and a quick peer comparison based is given below to assess its financial strengths vis a vis other major players. PNB holds 51% in PNB Housing Finance and 49% is held by Carlyle Group which is one of the world’s largest and well known investment firm.
Detailed IPO Analysis Link: http://www.ipoandmore.com/2016/10/18/pnb-housing-finance-ipo-analysis/
Issue date: 25 to 27 Oct 2016
Price Band – Rs. 750 – 775
Table 1: Peer Group I- PNB Housing Finance vs Other HFCs (updated 19/10/2016)
* PNB Housing figures are based on pre issue equity. Post IPO figures for PNB Housing are given at Table 3.
|Company||PNB Hsg*||HDFC||LIC Hsg||IBulls Hsg||DHFL|
|Market /Issue Price||775||1342||615.65||880.65||334.65|
|Return on Equity||17.60%||21.26%||19.58%||27.00%||15.32%|
|CAGR sales 3 yrs||59.42%||13.97%||17.71%||23.80%||21.65%|
|CAGR Sales 1 yr||51.63%||11.43%||15,34%||27.09%||22.76%|
|CAGR NP 3 Yr||52.25%||15.35%||17.52%||23.15%||18.04%|
|CAGR NP 1 yr||68.79%||18.57%||16.63%||17.23%||16.98%|
Table 2 :Peer Group II- PNB Housing Finance vs Other HFCs
|Company||PNB Hsg||Gruh Fin||Repco||Canfin||GIC Hsg|
|Market /Issue Price||775||339.1||780||1824||347.2|
|CAGR sales 3 yrs||59.42%||25.31%||29.51%||40.25%||16.53%|
|CAGR Sales 1 yr||51.63%||18.84%||26.03%||30.23%||17.95%|
|CAGR NP 3 Yr||52.25%||18.63%||23.33%||42.64%||13.55%|
|CAGR NP 1 yr||68.79%||19.43%||24.03%||75.81%||21.46%|
Table 3 : PNB Housing Finance – Post IPO Figures
|Company||PNB Hsg (Post IPO)|
|Market /Issue Price||775|
A look at CAGR figures for sales and Net profit reveal good very aggressive growth by PNB Housing Finance in last few years even as promoter PNB does not enjoy much confidence of markets but backing of Carlyle Group , one of the world’s largest and successful investment firms is a big plus.
At the upper end of price PNB Housing Finance is asking for P/BV ratio of 4.5 & PE ratio of 30.79 . both P/BV and PE ratio are higher than other HFCs. However the IPO will have to be evaluated on its HY 2016 performance which is likely to be better.
For Q1Fy17 PNB Housing Finance is reported to have made a net Profit of 96 Crore.
Standard disclaimer: I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.