PNB Housing Finance shares fall 3% despite growth in Q2 profit; 3 brokerages say ‘Buy’, see up to 34% upside

The stock opened at Rs 1,170 and declined 3.18 percent to touch an intra-day low of Rs 1084.30. Following the results for the second quarter of the financial year 2026-27 (Q2 FY27), Motilal Oswal Financial Services, ICICI Securities and Emkay Global maintained their Buy ratings on the stock. PNB Housing Q2 results PNB Housing Finance reported a 6 per cent increase in its net profit to Rs 617 crore for the second quarter ended September 2026.

The housing finance firm earned a net profit of Rs 582 crore in the same quarter of the previous year. The company's total income for the quarter grew to Rs 2,424 crore from Rs 2,131 crore a year ago. Its interest income was higher at Rs 2,289 crore compared to Rs 2,017 crore in the year-ago period. The net interest income rose 15 per cent to Rs 878 crore against Rs 765 crore in the year-ago quarter.

The net interest margin remained flat at 3.67 per cent. Asset quality improve during the September quarter, with gross non-performing assets (NPAs) declining to 0.91 per cent from 1.04 per cent at the end of September 2025. Its capital adequacy ratio declined to 27.02 per cent as of September 30, 2026, from 29.80 per cent at the end of the second quarter of the previous fiscal. The company's assets under management stood at Rs 98,210 crore as of September 30, 2026, registering a growth of 17 per cent.

Brokerages on PNB Housing Finance share price Motilal Oswal Financial Services on PNB Housing share price: Buy, target price Rs 1,500 with 34% upside Motilal Oswal Financial Services reiterated its ‘Buy’ call PNB Housing Finance with a target price of Rs 1,500, implying an upside of around 38 percent. The brokerage said the company was moving into the orbit of stronger loan growth, supported by healthy retail disbursements, stable adjusted net interest margins and benign credit costs driven by recoveries.

PNB Housing Finance's profit after tax (PAT) rose 6 percent YoY to around Rs 620 crore in Q2 FY27, broadly in line with the brokerage's estimates. NII increased approximately 17 percent to Rs 870 crore, while pre-provision operating profit (PPOP) grew 16 percent to Rs 750 crore. “Credit costs (net of recoveries) resulted in the provision write-back of Rs 47.5 crore vs estimates Rs Rs 37.9 crore. This resulted in net credit costs of -21bp (PQ: -13bp and PY: -57bp),” it said.

Although management retained its FY27 loan book growth guidance of 18-20 percent, the brokerage expects growth of around 23 percent during the financial year. The company is also evaluating lending-rate increases following a 25-basis-point repo-rate hike. It expects its cost of funds to rise by around 9-10 basis points and is considering lending-rate hikes of 10-15 basis points for retail loans and 15-20 basis points for corporate loans, effective November 1, 2026.

“The company intends to pass on the impact of higher borrowing costs to customers to protect spreads, while closely monitoring competitors' pricing actions,” it said. The brokerage said PNB Housing is transitioning toward a higher-growth and higher-yielding business mix, with affordable and emerging housing segments remaining its key pillars of expansion. The company’s focus on building a stronger franchise across these segments, coupled with potential improvement in margins and resilient asset quality, provides visibility on sustainable earnings delivery.

The brokerage expects PNB Housing Finance to deliver a compound annual growth rate (CAGR) of 23 percent in loans and 13 percent in PAT between FY26 and FY28. It estimates a return on assets (RoA) of around 2.3 percent and return on equity (RoE) of 12.7 percent for FY28. Motilal Oswal's target price is based on 1.5 times the estimated September 2028 book value per share. ICICI Securities on PNB Housing share price: Buy, target price Rs 1,350 with 20% upside

ICICI Securities reiterated its ‘Buy’ recommendation for PNB Housing Finance with a target price of Rs 1,350, implying an upside of approximately 24 percent. The brokerage said PNB Housing Finance’s H1FY27 financial performance reflects its structural transformation, characterised by strong 19 percent YoY loan growth (its highest since FY19), improved core asset yields (around 8bps QoQ expansion), and robust asset quality, with GNPL falling to 0.91 percent.

ICICI Securities believes PNB Housing is well positioned to navigate the prevailing macroeconomic headwinds, such as rising interest rates and regional droughts, without a material risk to its profitability. “This resilience will likely be supported by its AAA credit rating, higher incremental asset yields, scaling high-yielding portfolios such as micro housing, emerging developer finance, and Emerging Markets + Affordable over prime.

These high-yielding segments are strategically designed to offset the impact of higher interest rates, while credit risk is mitigated by minimal direct Agri-exposure,” it added. The brokerage further stated that after successfully strengthening its retail asset franchise during FY24–25, the company has shifted its focus towards accelerating loan growth and enhancing profitability. Under the new leadership of Ajai Shukla (taking charge as MD & CEO in December 2025), its superior execution track-record reflected in a sharp acceleration in loan growth to 19 percent YoY in Q2 FY27 (its highest since FY19), and a notable 12bps QoQ expansion in core spreads despite operating in highly competitive product segments.

Its strategic pivot towards high-yielding segments like micro housing (INR 0.7bn disbursements in Q2FY27), emerging developer finance (Rs 0.4 billion), Emerging Markets + Affordable (44 percent of total Retail disbursements), alongside a focus on the less-competitive self-employed category (57% of retail disbursements in H1FY27 vs. 43% in H1FY26), is driving higher disbursement yields (at 9.64% in Q2FY27 vs 9.54% in Q1FY27), it said.

“Entering a rising rate cycle with recent credit rating upgrades to AAA and increasing share of high-yielding portfolio, management expects continued spread expansion in the near term,” the brokerage stated. ICICI Securities' target price is based on 1.5 times the estimated price-to-book value for September 2027. Emkay on PNB Housing share price: Buy, target price Rs 1,400 with 25% upside Brokerage Emkay Global also maintained a ‘Buy’ rating on PNB Housing Finance, with a target price of Rs 1,400, implying an upside of around 29 percent.

The brokerage the company reported a good quarter, with healthy growth, improving margins, and resilient asset quality in the September quarter. “Growth remained broad-based, led by Affordable and Emerging markets, with Management target to achieve around 45% of the retail book by FY27-end in these higher-yielding segments, while maintaining 18–20% overall growth guidance,” it said. Emkay expects underlying NIM to improve from around 3.5 percent, supported by improving asset mix, higher incremental yields and gradual funding benefits from the company's credit-rating upgrade.

Management expects to largely pass on most of the impact of the recent rate hike, keeping margin impact neutral-to-positive. The brokerage also pointed to improving asset quality, with gross NPAs declining to 0.91 percent and strong legacy recoveries leading to negative credit costs (-19 bps) during the quarter while normalized credit costs are expected to settle at around 10-12 basis points. Emkay noted that management had maintained its RoA guidance of approximately 2.4 percent, with direct assignment sell-downs and selective corporate lending could providing additional avenues for profitability levers.

On the proposed insurance-commission regulations, the brokerage said management sees the impact as manageable via higher cross-sell, processing fees, DA income, and cost controls. It retained its target price of Rs 1,400, based on 1.5 times the estimated FY28 price-to-book value.