PNB Housing Finance share price surges 10% after Q4 earnings beat — Time to buy or book profit?

Shares of PNB Housing Finance Limited rose sharply on April 21, gaining nearly 10 per cent in early trade, supported by strong quarterly earnings and positive commentary from brokerages.

The stock was trading at Rs 996.40, up Rs 89.65 or 9.89 per cent at around 09:31 am. It has gained 17.69 per cent over the past week and 25.82 per cent in the last month. However, it remains marginally down 1.03 per cent over the past year.

Earnings beat expectations

Brokerages said the company reported a better-than-expected performance in the March quarter, driven by provision write-backs, stable asset quality and steady loan growth.

According to Motilal Oswal Financial Services, profit after tax (PAT) for Q4FY26 rose 19 per cent year-on-year to about Rs 6.6 billion, which was around 14 per cent above its estimates. For the full year FY26, PAT increased 18 per cent YoY to Rs 22.9 billion.

Net interest income (NII) grew around 11 per cent YoY to Rs 8.1 billion, broadly in line with estimates. However, other income declined about 10 per cent YoY to Rs 1.2 billion, while operating expenses rose 17 per cent YoY to Rs 2.5 billion.

Pre-provision operating profit (PPOP) increased around 5 per cent YoY to Rs 6.8 billion in the quarter. For FY26, PPOP rose about 11 per cent YoY to Rs 25.8 billion.

Loan growth and disbursements remain strong

The brokerage highlighted that earnings were supported by provision write-backs of about Rs 1.8 billion, aided by recoveries. Net credit cost stood at 83 basis points during the quarter.

Loan growth remained steady, with the total loan book rising about 15 per cent YoY and 6 per cent sequentially to around Rs 873 billion. Retail loans grew 16 per cent YoY to Rs 869 billion.

Disbursements were also strong, with retail disbursements increasing 32 per cent YoY to Rs 90.2 billion in Q4FY26. However, the company continued to face competitive pressure, reflected in elevated repayment rates of about 20.5 per cent.

Margins and asset quality improve

On margins, net interest margin (NIM) expanded 6 basis points sequentially to 3.69 per cent. Cost of borrowings improved 15 basis points QoQ to 7.35 per cent, while yields moderated 25 basis points to 9.47 per cent.

Asset quality improved during the quarter, with gross non-performing assets (GNPA) declining to 0.93 per cent from 1.04 per cent QoQ, and net NPA falling to 0.57 per cent from 0.68 per cent.

The company reported return on assets (RoA) of 2.9 per cent and return on equity (RoE) of 14 per cent for the quarter. The board also recommended a dividend of Rs 8 per share. Capital adequacy remained strong, with CRAR at 27.3 per cent.

Motilal Oswal said the company’s performance was supported by improving asset quality and benign credit costs, though higher operating expenses and weaker fee income remain concerns.

Brokerages remain positive

Meanwhile, Morgan Stanley maintained an “Overweight” rating on the stock with a target price of Rs 1,160. At the current market price of Rs 996.40, this implies a potential upside of about 16 per cent.

Morgan Stanley said strong execution and better recoveries drove the earnings beat. It noted that disbursements of around Rs 9,350 crore were about 15 per cent above estimates, while retail loan growth remained healthy at 16 per cent YoY.

The brokerage added that valuations remain attractive, which could support further investor interest in the stock.