PNB Housing Finance plans to increase the share of affordable and emerging housing loans to around 50% of its portfolio by FY28, from 41% currently, Managing Director and CEO Ajai Kumar Shukla tells Christina Titus and Kshipra Petkar. He expects the affordable housing to grow 60% in FY27, while the overall book growth is projected at 18-20%.
Disbursements fell sequentially across all three segments in Q1. Why?
Q1 is seasonally weaker than Q4. On a year-on-year basis, retail disbursements grew 14% despite a change in reporting methodology. It will normalise from the next quarter. Disbursements in affordable housing grew 11% on cheque handover basis. The overall industry is growing by 11-13% and we remain confident of achieving our 18-20% growth guidance.
Which segments will drive the 18-20% growth?
We have planned to grow prime at a slower pace, at around 10-12%. Emerging should grow around 25%, while affordable should grow by around 60%.
Where are you seeing the growth in affordable housing?
It is across segments, including tier-I cities. We have enabled our prime and emerging branches to also do the affordable housing business.
What is your strategy for construction finance book?
We have started the segment now. So, we will not be doing more than 3% of our overall business. Our focus is to remain a retail housing finance company.
What is your outlook on margins?
I feel that margins have bottomed out. The change in portfolio mix will help. We are looking at increasing the share of emerging and affordable housing from around 41% to around 45% by the end of this year. By FY28, we expect it to be around 50%. We did also have our rating upgraded recently, which should help in terms of borrowing costs over the long term. Once borrowing costs ease, perhaps around the third quarter, margins should improve.
What are your funding plans for FY27?
Bond market borrowing is not very cheap as of now. We will maintain the same borrowing mix that we currently have.
What is your outlook on the real estate market, particularly property prices?
Property prices are stable now. There has not been a very sharp increase in prices. Over the next six to 12 months, if there is any growth, it would be very nominal because prices have already increased significantly. In the housing finance market, rates are stable.
What are your plans for the micro-housing segment?
We will start doing business from existing affordable housing branches. I think it should start shaping up in Q3 and Q4. The yield would be in the range of 14-15%. By March, we expect the book to be around Rs 100 crore. The average ticket size would be around Rs 12-13 lakh. The range would be Rs 9-15 lakh.
How are you using technology?
The entire disbursement is now processed through a new loan origination system, with AI being used for customer calling in sanctioned- undisbursed cases and pre-delinquency management. The company is also running a few pilot projects. Once these are completed, we will increase our footprint in AI.