PNB Housing Finance shares are in focus. The stock has run up 8% in the past 5 days and domestic brokerage firm Motilal Oswal expects double-digit rally going forward. It has reiterated a Buy rating on PNB Housing, citing profitability prospects and consistent recovery trends.
The brokerage has set a target price of Rs 1,080. This indicates a potential upside of around 16% from current levels. According to the brokerage report, PNB Housing’s Q2FY26 performance was broadly in line with estimates, though profits came in higher due to certain one-off gains. However, they believe that the company’s continued focus on retail growth, stable margins, and improving recoveries could support a healthy performance in the coming years.
Let’s take a look at the key reasons why the brokerage is bullish on the stocks –
Motilal Oswal on PNB Housing: Profitability momentum likely to continue
As per the brokerage report, “We continue to believe in the company’s ability to drive profitability improvement, supported by a healthy retail loan CAGR of 18%, NIM expansion from FY27 onwards, and benign credit costs on the back of sustained recoveries from the written-off pool.”
The brokerage firm expects PNB Housing to maintain steady growth in its retail loan portfolio while also resuming selective corporate disbursements in the second half of FY26.
The brokerage estimates the company to deliver a loan and profit CAGR of 18% and 16%, respectively, during FY25–28, with a return on assets (RoA) of 2.5% and return on equity (RoE) of 13.5% by FY28.
Motilal Oswal on PNB Housing: Retail focus and cost control to aid margins
PNB Housing’s shift towards higher-yielding affordable and emerging housing segments has begun to pay off, the brokerage noted.
The brokerage report noted, “PNB Housing is focused on maintaining profitability through disciplined margin management, driven by a strategic shift toward higher-yielding affordable and emerging housing segments, coupled with a cautious resumption of corporate disbursements.”
Motilal Oswal on PNB Housing: Stable asset quality and consistent recoveries
According to the brokerage, PNB Housing’s asset quality remained stable in the second quarter, while the earnings received a boost from the release of around Rs 70 crore related to the foreclosure of a standard corporate account.
Motilal Oswal believes this trend of consistent recoveries underscores the company’s prudent credit practices and positions it well for sustainable growth.
Motilal Oswal on PNB Housing: Valuation and outlook
At the current market price, PNB Housing trades at around 1.1x its FY27 estimated price-to-book value (P/BV). The brokerage has valued the stock at 1.2 times its estimated book value for September 2027, which gives a target price of Rs 1,080.
The report noted, “We believe that the franchise has its inherent strengths, but the Board will need to instill greater investor confidence by appointing a suitable successor who closely aligns with the articulated strategy of the company.”
