CARE Ratings upgrades PNB Housing Finance's various instruments; here's why

The upgrade in ratings assigned to Finance (PNBHFL) derives strengths from its improving asset quality as reflected in the GNPA ratio of 1.73% as of December 31, 2023, as against 8% as of March 31, 2022, the filing said. Further, the revision of rating continues to factor in PNBHFL’s strong market position as the third-largest housing finance company (HFC) in the country on loan asset basis as on December 31, 2023, along with a well-diversified resource profile, the filing claimed.

"The ratings continue to take into consideration the brand linkages with (PNB) (rated at CARE AAA; Stable); the promoter of PNBHFL and the consistent support derived from the promoters," the filing said further.

The Housing Finance has been a market laggard in 2024, so far with negative returns of over 20% as against Nifty which has delivered 2.7% returns during this period. However, the stock's returns of nearly 48% over the past 12 months tower over 30% upside seen in Nifty in the same period.

Owing to the recent correction, the stock has slipped below its 50-day and 200-day simple moving averages (SMAs). Momentum indicators RSI and MFI as reported by Trendlyne show that the stock is trading in a medium range. While the former stands at 38.3, the latter is hovering near the 34 mark. A number above 70 is considered to be overbought while below 30 is seen to be oversold.

On Thursday, PNB Housing Finance shares closed at Rs 627.65 on the NSE, falling by Rs 2.70 or 0.43% over the previous closing price. On Friday markets were closed for trading on account of Good Friday.

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