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Investing.com - UBS initiated coverage on PNB Housing Finance Ltd (NSE:PNBH). (PNBHOUSI:IN) with a Buy rating and a price target of INR1,300.00 on Friday.
The investment bank identified PNB Housing Finance as one of India’s largest housing finance companies with a loan book of Rs800 billion, noting that prime loans currently represent 73% of its portfolio.
UBS expects the company’s expansion into emerging and affordable loan segments to support a 16% assets under management (AUM) compound annual growth rate over FY25-27E, with non-prime loans projected to reach 40% of the book by FY27 compared to 25% in FY25.
The firm forecasts this diversification strategy will drive yield expansion and lead to a 13% earnings per share compound annual growth rate over FY25-27E, potentially pushing return on equity above 13% by FY28E.
At 1.4x FY27E price-to-book value, UBS believes PNB Housing Finance trades at a discount to peers despite its robust loan growth and improving return on equity profile, creating a favorable risk-reward opportunity for investors.
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