PNB Housing hits 52-week high; soars 88% in seven days

PNB Housing Finance hit an upper circuit of 10% at Rs 762.50 on BSE, extending its winning run to seventh consecutive trading session.

Shares of PNB Housing Finance have rallied 88.76% in seven trading days from its previous closing low of Rs 403.95 on 25 May 2021. The counter hit a 52-week high of Rs 762.50 in intraday today. The stock has soared 308% from its 52-week low of Rs 186.70 hit on 3 June 2020.

The company on Monday (31 May) announced that its board has approved a capital raise of up to Rs 4,000 crore, led by entities affiliated to The Carlyle Group Inc. PNB Housing will raise Rs 3200 crore through preferential equity shares and Rs 800 crore through warrants. The issue price of equity shares and warrants is fixed at Rs 390 each.

Pluto Investments, an affiliated entity of Carlyle Asia Partners IV and Carlyle Asia Partners V, (together, Carlyle) has agreed to invest up to Rs 3,185 crore through a preferential allotment of equity shares and warrants, at a price of Rs 390 per share. Existing shareholders of the company, funds managed by Ares SSG and General Atlantic, are also participating in the capital raise. PNB will continue to be the promoter and a key stakeholder in the company.

The proposed transaction has triggered a mandatory open offer by Pluto Investments for the purchase of up to 26% equity shares of PNB Housing Finance from public shareholders. The open offer is for the acquisition of up to 7,07,93,011 fully paid up equity shares of PNB Housing Finance, representing 26% of the expanded voting share by Pluto Investments. The open offer is being made at a price of Rs 403.22.

As part of this transaction, Salisbury Investments, the family investment vehicle of Aditya Puri, Senior Advisor for Carlyle in Asia and the former CEO & managing director of HDFC Bank, will also invest in the capital raise. Aditya Puri is expected to be nominated to the PNB Housing Finance board as a Carlyle nominee director in due course.

PNB Housing said that the key objective of raising capital is to augment capital adequacy, reduce gearing and accelerate growth with a focus on retail housing including self-employed and affordable housing loans such as the Unnati segment. Assuming full capital infusion (including warrants) and no other change to the 31 March 2021 financials, the capital adequacy ratio of the company as of 31 March 2021 would increase from 18.7% to over 28% and gearing as of 31 March 2021 will decline from 6.7x to less than 5x.

On the technical front, the stock’s RSI (relative strength index) stood at 92.379. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.

The stock is trading above its 50 and 100 days simple moving average placed at 404.51 and 396.89 respectively. These levels will act as crucial support zones in the near term.

PNB Housing Finance is a deposit-accepting housing finance company, with the second-largest deposits outstanding within housing finance companies. The company provides housing loans to individuals for the purchase, construction, repair, and upgrade of houses.

On a consolidated basis, PNB Housing reported a net profit of Rs 127 crore in Q4 FY21 compared with net loss of Rs 242 crore in Q4 FY20. Total income fell 6% to Rs 1,833.90 crore in Q4 FY21 over Q4 FY20.

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