PNB not looking to sell its 7% stake: PNB Housing Finance MD

Interview with Sanjaya Gupta, managing director, PNB Housing Finance

PNB Housing Finance Company, which raised Rs 3,000 crore capital from the markets last year in its first outing will open 23 more branches in 14 different cities in FY18 to expand their presence. Sanjaya Gupta, managing director of the 28-year old firm in an interview said they'll opt for a follow-on public offer (FPO) from three years now. He tells Dilasha Seth and Indivjal Dhasmana that the new launches have slumped, but are expected to pick up in November-December after Real Estate Regulation Authority (RERA) will come into effect after July-end. 

How is the company doing after the IPO last year? When do you plan to raise further capital?

Life after initial public offering (IPO) has been good. We are fully capitalised because it has fueled our growth and improved our profitability a lot. We were heavily leveraged for 15 times, when we went for the IPO. For 30-36 months we wouldn't need to go to the market. In three years time, we will go for follow-on public offer (FPO). Presently, we have enough capital.

What is the topmost agenda on the table in terms of capital utilisation? Any plans for expansion?

This capital will take our company from investment phase to growth phase, and through our expansions. We are the fifth largest housing finance company. But in terms of our footprint, we are limited to 39 cities and 63 branches. Our first and foremost agenda on the table is to have our branch network across the country, and increase our presence from 39 cities to around 70 cities in next two to three years. Currently, we are targeting to those cities with population of more than a million, and our growth will come from expansion.

How many branches are you planning to open in FY18?

In FY18, we are going to open 23 branches in 14 new cities. It is a big task but we are sure that we are going to achieve it, in cities such as Jamshedpur, Bhubaneshwar, Ranchi. 

What was the impact of demonetisation on the housing market?

The impact of demonetisation did happen for about 45-50 days after November 8 and now, it's done. After a quarter, everything became fine.The bounce rates came down the delinquency levels came down. 

Do you agree that there is a slump in the real estate sector? When will things start looking up?

There has been a slump as far as new launches are concerned. But things will start looking up from November-December. Things will be good after 6-7 months, when Real Estate Regulation Authority (RERA) will be effective throughout the country after July 31. At present, number of developers are refrained to launch their new projects because it has to approve under RERA in a particular state, as each state has its own law. But sales of ongoing projects are going fine. 

Is PNB going to sell its 7% stake in PNB Housing Finance after the lock in period ends in November?

They are not selling any stake. Neither PNB nor Carlyle. Carlyle informed us that they are loving it and are not going to sell their stake. PNB or Carlyle are not selling stake on November 8 when the lock in period gets over. 

What is your assessment of interest rates at this moment?

The interest rate is at the bottom of the curve. It is not going down any further. For three years, the rate of interest has been coming down and has moved into single digits but has it increased credit growth or credit quality? No. It is the business environment and the sentiment that sells credit. But then if my cost goes down, I will pass it on to the customers.