PNB Housing Finance Q2 Profit Jumps 24% Amid CEO Exit

Introduction

PNB Housing Finance has demonstrated strong financial resilience, reporting a significant 24% year-on-year increase in net profit for the second quarter of fiscal year 2026. This robust performance comes at a pivotal time for the company, as it navigates a key leadership transition following the resignation of its Managing Director and CEO, Girish Kousgi. The impressive earnings highlight the company's solid operational momentum and strategic focus on high-growth retail segments, even as the board actively searches for a new leader to steer its future course.

A Significant Leadership Transition

The company is currently managing a major change at its helm. Girish Kousgi, who served as MD & CEO, submitted his resignation on July 30, 2025, and officially vacated his office on October 28, 2025. Kousgi was instrumental in the company's strategic evolution, particularly in aligning its operations with customer-centric solutions. The board has acknowledged his contributions and initiated the process to find a successor, considering both internal and external candidates. In the interim, Executive Director Jatul Anand is leading the team, ensuring operational continuity. Reports suggest that Ajai Shukla, currently the Chief Business Officer at Tata Capital Housing Finance with over 30 years of experience, is a potential candidate for the top role, though an official announcement is pending.

Stellar Q2 Financial Performance

PNB Housing Finance announced strong financial results for the quarter ended September 30, 2025. The company's net profit surged by 24% year-on-year to Rs 582 crore, up from Rs 470 crore in the corresponding quarter of the previous year. This growth was driven by a healthy increase in core income. Total income for the quarter rose by 13% YoY to Rs 2,131 crore. Net Interest Income (NII) also saw a substantial 14.4% increase, reaching Rs 765 crore. The Pre-provision Operating Profit (PPOP) grew by 15.6% to Rs 646 crore, indicating strong operational efficiency. However, the Net Interest Margin (NIM) saw a marginal dip to 3.67% from 3.68% a year ago, attributed to changes in the portfolio mix and investment yields.

Key Financial Highlights (Q2 FY26)

Strategic Shift to Retail Lending

The company's growth is underpinned by a clear strategic pivot away from corporate lending towards a retail-focused model. As of September 30, 2025, the corporate loan book has been reduced by 78.3% YoY to just Rs 332 crore. In contrast, the retail loan book grew by 16.9% YoY to Rs 79,439 crore. The primary drivers of this growth are the Affordable and Emerging Markets segments. The Affordable loan portfolio expanded by an impressive 120.8% YoY to Rs 6,531 crore, while the Emerging Markets segment grew by 20.8% YoY to Rs 23,994 crore. These two high-yielding segments now constitute 38% of the total retail loan assets and contributed to 50% of retail disbursements in the quarter, aligning with the company's goal of enhancing profitability.

Consistent Improvement in Asset Quality

PNB Housing Finance has made significant strides in improving its asset quality. The Gross Non-Performing Assets (GNPA) ratio stood at 1.04% as of September 30, 2025, a marked improvement from 1.24% a year earlier. The Net NPA (NNPA) ratio also improved to 0.69%. The retail segment's GNPA was 1.05%, while the corporate GNPA has been NIL since June 2025, reflecting a successful resolution of legacy corporate stress. The company's credit cost was negative for the quarter, primarily due to recoveries from previously written-off accounts, which further boosted profitability.

Management Commentary and Outlook

Executive Director Jatul Anand commented on the quarterly performance, stating, “Despite the challenges posed by leadership transitions, we have delivered a strong and resilient performance across all key metrics this quarter. This outcome reflects the strength of our organizational culture.” He emphasized that the strategic focus remains on accelerating retail growth, particularly in the Affordable and Emerging Markets segments. For FY26, the company has guided for loan growth of 17-18% and aims to expand its affordable book to Rs 15,000 crore by FY27, while maintaining industry-leading asset quality.

Analyst Perspectives

Brokerage firms have maintained a positive outlook on the company following its Q2 results. Motilal Oswal raised its target price to Rs 1,080, citing the company's performance being in line with expectations and the impending appointment of a new CEO. The firm values the stock at approximately 1.2 times its FY27 estimated book value. Bernstein maintained its target price of Rs 1,020, acknowledging the strong retail growth and recoveries, though it noted concerns around NIM pressure. ICICI Securities has previously issued both 'hold' and 'buy' ratings, with target prices of Rs 970 and Rs 1200, respectively, reflecting a dynamic view of the stock's potential.

Conclusion

PNB Housing Finance has delivered a commendable performance in Q2 FY26, showcasing strong growth in profit and loan assets, driven by its successful retail-centric strategy. The continuous improvement in asset quality and a strong capital position provide a solid foundation for future expansion. While the ongoing leadership transition remains a key factor to monitor, the management's reassurance of strategic continuity and the company's robust operational framework suggest it is well-positioned to sustain its growth momentum. The appointment of a new CEO will be a critical next step in shaping the company's long-term trajectory.