PNB Housing outshines peers on strong loan growth

In 2026, PNB Housing Finance shares have surged by 24%, marking the highest gain among its peers, with many others failing to deliver returns. The BSE Financial Services index, in contrast, has slipped by 4% year-to-date. The company's success lies in consistent loan disbursement growth and its expanding focus on high-yield affordable and emerging housing markets while maintaining stable asset quality. Analysts forecast a double-digit annual increase in disbursements and net profit for PNB Housing between FY26 and FY28.

Despite the recent stock price rise, PNB Housing's valuation remains attractive, with a trailing price-book (P/B) ratio of 1.6, which is below the typical 2-to-3 range for its competitors. This valuation is partially due to the company's increased emphasis on prime housing, which typically yields lower returns compared to the affordable housing sector.

PNB Housing's return on equity falls within the 11%-13% range, while some rival lenders, such as Aadhar Housing Finance, Aptus Value Housing Finance India, and Home First Finance Company India, boast higher returns on equity between 15%-20%, catering mainly to the low-cost housing market.

To close the valuation gap, PNB Housing plans to raise the share of affordable and emerging housing in its retail loan portfolio to 45% by the end of FY27 and increase it to 50% in the following two years, up from the current 40%. Additionally, the lender introduced financing options for developers and micro-housing during the June quarter to enhance yields, which have remained around 9.5%, similar to the previous quarter.

PNB Housing recently revised its disbursement recognition method for the June quarter, shifting from cheque handover to cheque realization. This change led to a significant sequential drop of 37% in disbursements to ₹5,882 crore, although disbursements rose by 18% year-on-year. The lender's assets under management (AUM) and total loan book expanded by 13% and 15% respectively, reaching ₹93,021 crore and ₹89,670 crore. The gross nonperforming assets (GNPA) ratio remains under 1%, indicating stable asset quality.

PNB Housing's upcoming moves, including a stronger focus on developer financing, increasing the share of affordable and emerging segments, and expanding into micro-housing, are expected to bolster yields while maintaining strong disbursement growth and consistent recoveries. These factors, according to JM Financial Institutional Securities in a review report, are likely to drive further growth and profitability for the company.