Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– PNB Housing- PNBFinanceHousingLtd (PNBH.NS)Finance Ltd (PNBH.NS)

Focus will be on affordable housing growth; deep value drives OW

PRICE TARGET Rs1,250.00 OVERWEIGHT THESIS

Residual income model, probability-weighted 85% base, 10% bear and 5% bull. The skew to ▪A YoY decline in affordable housing

bear case reflects current geopolitical uncertainty. disbursements in 3QF26, albeit on a strong

We value the business over three phases: a five-year high-growth period, a 10-year maturity base, unsettled investors. Affordable

period and a terminal period. disbursements have since recovered in

Key assumptions: Cost of equity 12.25% (beta 1.0, risk-free rate 6.75%, market risk premium 4QF26 but remained slightly lower YoY.

of 5.5%), terminal growth rate 6% ▪We see a delay in some of the erstwhile

guided milestones owing to some Rs1,191.36

moderation in industry growth and

Consensus Price Target Distribution Rs960.00 Rs1,350.00 management transition. MS PT

we observe that overallSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates ▪However,

execution in the past two years has been

strong.

▪A fully secured loan book adds

RISK REWARD CHART defensiveness in the context of macro

uncertainty.

INR ▪We find valuation at a deep discount to

Rs2,070.00Rs2,070.00(+98.12%)Rs2,070.00(+98.12%)(+98.12%) peers and see significant upside, though it

could take time to be realized.

Consensus Rating Distribution

1500 92% Overweight

Rs1,250.00Rs1,250.00(+19.64%)Rs1,250.00(+19.64%)(+19.64%) 8% Equal-weight

Rs1,044.80Rs1,044.80Rs1,044.80 0% Underweight

MS Rating

Source: Refinitiv, Morgan Stanley Research

500 Rs680.00Rs680.00(-34.92%)Rs680.00(-34.92%)(-34.92%)

Risk Reward Themes

JUN '25 DEC '25 JUN '26 JUN '27 Self-help: Positive