PNB Housing Finance is the country's fifth largest housing finance company and is backed by Punjab National Bank (33% stake). The following structural challenges will inhibit improvement in return ratios of the company:

• Credit costs going up: Widening differential in credit spreads between AAA & AA rated entities will likely increase cost of borrowing. Furthermore, elevated leverage will limit the company's ability to gain significant market share.

• Lack of visibility on bottoming of asset quality given macro challenges, demand sluggishness and a potentially insufficient impact of the government’s real estate fund, asset quality will remain subdued

• Change of mix towards individual housing from real estate developers is yet to gain traction.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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