Synopsis:
PNB Housing Finance is in focus after Goldman Sachs assigned a Buy call on the stock with an upside of 81% citing attractive valuation and strong fundamentals.
Goldman Sachs believes that the recent downfall in PNB Housing presents a fair buying opportunity and, on the basis of its strong fundamentals, it expects the stock price to rise by another 81 percent.
With a market capitalization of Rs 19,960 crore, the shares of PNB Housing Finance Ltd are currently trading at Rs 767 per share, down by 36 percent from its 52-week high of Rs 1,201.45 per share. Over the past five years, the stock has delivered a robust return of 323 percent.
Leading brokerage house, Goldman Sachs, has maintained its “Buy” call on the stock with a target price of Rs 1,386 per share, signaling an upside potential of 81 percent from its current market price of Rs 767 per share. Shares of PNB Housing Finance have taken a significant hit, plummeting 28 percent over the past nine trading days, with declines in eight of those sessions.
The most dramatic drop occurred on Friday, August 1, when the stock nosedived more than 18 percent after the resignation of MD & CEO Girish Kousgi, who left for personal reasons. This steep decline has pushed the stock onto the Futures & Options (F&O) ban list, which means no new derivative positions can be opened.
However, Goldman Sachs is still optimistic about the stock. It believes that PNB Housing’s profitability remains strong and that the recent price drop is excessive, presenting a good buying opportunity.
The firm anticipates a 15 percent earnings compound annual growth rate (CAGR) from FY25 to FY28. In the short term, investors will likely keep an eye on the quarterly results and the appointment of a new CEO.
The brokerage points out three positive factors: stable asset quality, growth in lending spreads despite competition, and robust disbursement growth in the affordable and emerging markets segments.
Financial Highlights
The company reported a net interest income growth of 17 percent to reach Rs 760 crore in Q1 FY26 as compared to Rs 651 crore in Q1 FY25. Additionally, it grew by 4 percent from its previous quarter’s income of Rs 734 crore.
Coming to its profitability, the company reported a net profit growth of 23 percent to Rs 534 crore in Q1 FY26 as compared to Rs 433 crore in Q1 FY25. However, it declined marginally by 3 percent from its previous quarter profit of Rs 550 crore.
The stock delivered an ROE and ROCE of 12.27 percent and 9.46 percent respectively, and is currently trading at a low P/E of 9.98x as compared to its industry average of 20x.
PNB Housing Finance Ltd is a prominent housing finance company in India, providing a variety of home loan and property financing options. They cater to both individuals and businesses, offering loans for purchasing, constructing, repairing, or upgrading residential and commercial properties. Additionally, the company provides plot loans, NRI loans, loans against property, lease rental discounting, and funding for real estate developers, along with home loan and fixed deposit products.
Written by Satyajeet Mukherjee
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