 "Sanjaya Gupta")
There is speculation in the market that PNB Housing Finance, second biggest lender in the sector in terms of deposits and fifth on assets, will raise capital of Rs 2,500 crore through an initial public offering (IPO) of equity. Sanjaya Gupta, managing director, rules this out for now, telling Dilasha Seth and Indivjal Dhasmana they're adequately financed. The shareholders, Punjab National Bank (51 per cent) and Carlyle Group-owned Quality Investments Holdings (49 per cent), would decide on the strategy. Edited excerpts:
There is a market buzz that you’re coming up with an IPO.
There will be no IPO this financial year. There is enough capital for our growth engine. Our CRAR (capital to risk-weighted assets ratio) was 13.84 per cent as of September 30. Even in March (when this financial year closes), we will be adequately capitalised, so there is no hurry to list the company. Our business plan for this year is approved and there is no talk of an IPO.
What about the next financial year? If you come out with an IPO, will it be disinvestment or fresh equity?
It is a shareholders' matter. We keep helping the two shareholders on our board to visualise what is going to happen. We are adding a lot of share value. It will depend on whether they want to monetise the value or build more and then go.
What is your company's growth assessment for this financial year, relative to the sector's?
We will be doing many times over the sector's (average) growth. Credit growth and PAT (profit after tax) is also going to look very healthy. For the sector, the first half has not been very good, seeing the results of a few financial institutions. A best-case scenario will be 17-18 per cent credit growth in the housing finance sector. We will be surpassing that many times over, though on a small base.
We have one of the best portfolio classes in the sector. The gross NPA (non-performing assets ratio) and net NPA are one of the lowest, and we are spread across the country in 26 locations through 26 branches. So, we experience a very well-balanced incremental growth.
Will that momentum be reflected in your coming results?
We have a board meeting on November 2 and you will see the results on November 3. The complexion of the company has changed in the past six months and we will look very different from what you saw as of September 30. We are going to maintain our momentum of growth.
Reserve Bank of India has relaxed the norms for lending to the realty sector. How will that play out for you?
We are looking at it. It is indeed a positive move. We have to assess its impact. Our CRAR might become even better.The way risk weight works on LTV (loan to value) and loan amounts, we will have to see how much capital gets released for further growth.
There has been a slump in the realty market. When do you expect it to pick up?
I won't say there is a slump but the sentiment is negative. Real estate developers have learnt their lesson and are concentrating on deliveries. We hardly saw new launches in the navratra season this time.
What is your estimate of the realty market performance this financial year?
The market will be dominated by actual users. Capital appreciation will be in the range of 10-12 per cent, lending rates will be in single digits, and the year-on-year market size growth will be 20-22 per cent. So, this is not a slump. It is a lot of negative sentiment. It is a free market, after all, and there are sellers and buyers. The transaction velocity in the affordable housing segment will be higher.
Have you seen instances of some pick-up in activity in the realty space this festive season?
Yes, there is some visibility on transactions. Bengaluru, Pune, Hyderabad and Mumbai suburbs have seen great action. Also, last week, we were pleasantly surprised on hearing of transactions in South Delhi, with 10 high-end floors being sold. We hope it is a harbinger of better sentiment. For three years, the festival season was flat.
Are you considering lowering your interest rates after the sharp cut in repo by RBI?
It will happen but not overnight. If our cost of borrowing comes down over a course of time, we will obviously look at it.
As you are scattered geographically, where is your growth coming from?
South and west. Incrementally, only 38 per cent comes from the north. Today our portfolio and product spread is very balanced. We have quite a few branches in tier-2 cities, such as Trivandrum, Coimbatore, Indore, Bhopal, Varanasi, Agra, Ludhiana and Bikaner. Ahmedabad is a new location.
Do you plan to enter tier-3 cities?
We have not got the time to do so, at the moment.
In the light of the Bank of Baroda money laundering scam, would you put any mechanisms in place to avoid such instances?
Unlike a bank, our transactions are controlled and very safe that way. We only do term loans and robust checks at the time of underwriting loans. We carry out a lot of KYC (Know Your Customer) checks, anti-money laundering, fraud control, documentation, etc, so we certainly do not have that sort of a risk to which a bank is exposed.
