PNB Housing Finance (PNBHFL), the fastest-growing housing finance company (HFC) in India, has no plans to change its current portfolio mix after its upcoming ₹3,000-crore initial public offering (IPO), a top official said.
This HFC, the fifth-largest in the country, will continue to maintain the current retail-focused portfolio mix in the medium term, Sanjaya Gupta, Managing Director, said here on Tuesday.
As much as 85 per cent of PNBHFL’s portfolio is retail, including 62 per cent being pure retail housing loans. Construction finance accounts for just 9 per cent.
Lease rental discounting and corporate term loans, the only wholesale activities, account for the remaining 6 per cent.
“Going forward, this is the portfolio mix we are going to maintain in the medium term. We are not going to change our portfolio mix or the way we are doing our business just because we are doing an IPO of ₹3,000 crore,” Gupta said.
PNBHFL’s growth story has been basically a consumer/retail story and not a corporate or a wholesale story, he added.
‘Highly leveraged’Although PNBHFL has a “stable” return on equity of 18 per cent, the return on assets has remained compressed, Gupta noted.
The RoA has been compressed because PNBHFL remains a “highly levered” company, he added.
“While an average housing finance company is levered at eight times, we are levered at 15 times. This additional seven times leverage compresses our return on assets by 75 basis points.
“One of the reasons we are doing such a large IPO and 100 per cent primary is to correct the leverage.
“Going forward, we will maintain the business at the usual leverage of 9-10, and at 12 times we will raise capital in future. This is the management philosophy,” Gupta added.