PNB Housing Finance stock down 56% from 52-week high: Good time to buy?

Shares of PNB Housing Finance have tumbled 56 per cent from their 52-week high amid a highly volatile market. PNB Housing Finance, which hit a 52-week high of Rs 756.45 on August 5, 2021, is currently trading at Rs 333, translating into a decline of 55.94 per cent during the period.

The arm of Punjab National Bank has seen its sales falling constantly since the quarter ended September 2020. Sales which stood at Rs 2,015.51 crore for the September 2020 quarter fell to Rs 1,425 crore in the quarter ended March 2022.

Similarly, net profit has fallen to Rs 169.54 crore in the quarter ended March 2022 from Rs 313.29 crore for the quarter ended September 2020.  

Apart from the dismal quarterly earnings, the volatility and weakness in the Indian market have affected the PNB Housing Finance stock.

Lending rate hikes in major economies across the world, Russia-Ukraine war, high inflation, and resurgence of Covid-19 cases across the world, especially in China have dented sentiment in the domestic market.

PNB Housing Finance stock was trading flat in the current trading session. The stock was trading 0.68 per cent lower at Rs 334 against the previous close of Rs 336.30 on BSE. The share trades higher than the 20-day moving averages but lower than 5-day, 50-day, 100-day and 200-day moving averages.

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Total 3,783 shares of the firm changed hands amounting to a turnover of Rs 12.67 lakh on BSE. The market cap of the firm stood at Rs 5,631.69 crore on BSE.

The stock hit a 52-week low of Rs 312 on May 12, 2022.

The firm reported a 33 per cent jump in its net profit to Rs 170 crore in quarter ended March 2022. The housing finance company had reported a net profit of Rs 127 crore in the same quarter a year earlier.

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However, total income in Q4 fell to Rs 1,425.83 crore from Rs 1,833.90 crore in the same quarter of 2020-21 amid a fall in the interest income.

Here's a look at what analysts said on the outlook of the stock.

Manoj Dalmia, founder and director, Proficient Equities

"PNB Housing Finance is down 55 per cent in a year. The business can see some pickup due to housing demand. The company has reported lower quarterly revenues QoQ and the gross NPA increased to 7.61 per cent compared to 6 per cent in June 2021. The interest coverage ratio is also less compared, showing the inability to cover interest expenses. The stock can see a fall till Rs 312 from the current levels, where it can take some support. We don't expect a clear uptrend in the stock. Considering its fundamentals, investors can stay away for the time being."

Mohit Nigam, Head - PMS, Hem Securities

"From Rs 925 crore in FY21 to Rs 822 crore in FY-22, the company's net profit fell by 11 per cent. A few factors contributing to the share's decline include declining asset quality, a weak balance sheet, and difficulties raising cash. The company's two-year-plus capital-raising challenges have had a negative impact on the expansion of AUM and new business. In order to successfully compete, PNB Housing Finance has found it difficult to match the lower rates provided by other banks and housing finance companies for home loans. Overall, the sector appears promising, but capital infusion is required and the question today is what amount will be raised and what mode will be considered to assist the company is beginning to show loan growth."

Pavitraa Shetty, Co-founder & Trainer, Tips2Trades

"A steadily declining revenue and profit growth coupled with a bearish sentiment created by the Russia-Ukraine war and a rising interest rate scenario have led to a sharp fall in mid-cap and small-cap stocks including PNB Housing Finance. Technically, PNB Housing finance needs to close above Rs 378 on a daily basis or else a further fall till Rs 275 which is the next support is possible."