Multiple negatives derail stock price of PNB Housing; more downsides ahead

Higher funding costs, uncertainty around stake sale has Street worried

The PNB Housing stock slid 5 per cent on Wednesday to Rs 1,006 apiece. Including the last week, the fall has been a sharp 24 per cent. 

Despite the correction, experts believe there could be more downsides, citing three factors. They are the potential increase in cost of funds after the IL&FS turmoil, potential asset-liability mismatch (ALM), and the proposed stake sale by PNB Housing’s promoters — Punjab National Bank and Carlyle group. 

PNB Housing meets 35 per cent of its funding needs through non-convertible debentures — mostly short-term instruments. Based on June 2018 (Q1) numbers, its cost of funds stood at