India Ratings & Research Limited (Ind-Ra) has revised the outlook on
PNB Housing Finance Limited’s NCDs worth Rs15517cr (reduced from Rs21897cr) to ‘Negative’ while affirming rating at ‘IND AA’.
“The Outlook revision reflects an added uncertainty around the timing and quantum of PNBHF’s capital raising, which the agency believes could be critical in view of the stress in the loan portfolio, especially on the wholesale lending. This, if sustained, the agency believes, may require stronger stress absorbing buffers. The additional capital is also important to provide support for PNBHF’s loan growth, without significantly raising leverage,” company shared Ind-Ra rationale of rating.
In its announcement dated February 20, 2021, PNBHF announced that its promoter Punjab National Bank (‘IND AAA’/Stable) will no longer infuse capital in the company, and that it will be looking to raise Rs18 billion through a qualified institutional placement; preferential issue; rights issue or a combination thereof in one or more tranches.
The promoter had previously indicated that it would infuse Rs5 billion-6 billion and was awaiting an approval from the Reserve Bank of India to complete the same. While the improvement in PNBHF’s valuation augurs well, the promoter’s decision to not infuse further capital raises the prospects of material dilution in its promoter’s shareholding, which could have wider ramification, the company received the communication from India Ratings & Research on March 02, 2021.
PNB Housing Finance Ltd trade ended at Rs433 per piece down by Rs6.05 or 1.38% from its previous closing of Rs439.05 per piece on the BSE.