PNB Housing slips after rating downgrade

PNB Housing Finance informed that CRISIL downgraded its rating on the long-term debt instruments, bank facilities and fixed deposit programme of the company to 'CRISIL AA/FAA+' from 'CRISIL AA+/FAAA'.

Shares of PNB Housing Finance slipped 0.96% to Rs 412.95. It traded in the range of Rs 408.60 and Rs 416.40 so far during the day.

CRISIL has also revised the outlook on the long-term ratings to 'Stable' from 'Negative'. The rating on the commercial paper (CP) issue and the short-term non-convertible debentures has been reaffirmed at 'CRISIL A1+'.

Earlier in July 2019, CRISIL had revised the rating outlook to 'Negative' due to concerns over leverage metrics, moderation in capital adequacy ratios and increased vulnerability of asset quality in the wholesale loan portfolio.

The ratings agency said that the current downgrade in the long term rating is driven by lower than expected equity raise which will result in the correction in gearing metrics being lower than earlier envisaged. The rating action also factors in weakening of asset quality metrics due to slippages from some large developer accounts in the wholesale loan portfolio.

However, CRISIL also notes that PNB Housing's fund raising ability has remained intact over the last 6-9 months and it is continuing to maintain high on-balance liquidity. Further, CRISIL notes that the management now intends to recalibrate their growth strategy keeping in mind the capital availability and also increase the share of retail book due to challenges in the wholesale book. This will ensure that, post equity raise, the leverage metrics and capital adequacy levels remain under control. Consequently, the outlook has been revised to 'Stable'.

On a consolidated basis, the housing financier's net profit fell 21.8% to Rs 237.02 crore in Q3 December 2019 as against Rs 302.97 posted in Q3 December 2018. Net sales declined 0.2% to Rs 2,074.79 crore in Q3 December 2019 as against Rs 2,078.46 crore reported in Q3 December 2018.

PNB Housing Finance is a deposit taking housing finance company.

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