PNB Housing Finance Limited’s linkages with Punjab National Bank is likely to remain strong even post the initial public offer, says India Ratings and Research. The current rating of PNBHFL reflects Ind-Ra’s expectation of continued support from PNB.
PNBHF is planning to raise Rs. 30bn through an IPO, the proceeds of which will be used to support its growth plans. Post the planned issuance, PNB’s stake in the company would settle at around 37%-39% from 51%.
PNB housing shares its brand name with the bank and the latter has management control as well. PNB has the authority to appoint the MD for the company and the majority of the executive directors of PNBHFL are deputed from the bank.
These linkages are expected to continue post the IPO. PNB will continue to remain the single largest shareholder over the medium term.
PNBHFL’s loan book grew at a CAGR of 60% over FY13-FY16, while its profit after tax grew at a CAGR of 53% over the same period.