PNB Housing Finance Review and Latest Market premium


Incorporated in 1988, PNB Housing Finance Ltd, a subsidiary of Punjab National Bank offers housing loans to individuals and corporate bodies for the construction, purchase, repair, and upgradation of houses, as well as loans for commercial space, purchase of residential plots, loan against properties, and loans for real estate developers.

PNBHF is the fifth largest HFC in India by loan portfolio as of September 30, 2015 with the second largest amount of public deposits in an HFC in India as of March 31, 2015.Over the previous five years, it had implemented a business process transformation and re-engineering  programme, which has contributed to its becoming the fastest growing HFC among the leading HFCs in India as of March 31, 2015, Its loan portfolio grew at a CAGR of 61.76% from 39,696.63 million as of March 31, 2012 to 271,772.68 million as of March 31, 2016. As of March 31, 2016, its  housing loans constituted 70.34% of  total loan portfolio and its retail housing loans constituted 87.10% of  total housing loan portfolio.

The average loan size (at origination) of  retail housing loans as of March 31, 2016 was Rs.32 lacs. The Company conducts its operations through an operating model which, as of March 31, 2016, included 47 branches across the northern, western and southern regions of India and 16 processing hubs and its central support office (“CSO”) in New Delhi.
Its  distribution network included over 5,000 channel partners across different locations in India as of March 31, 2016,As of March 31, 2016, 2015 and 2014, approximately 40.40%, 46.43% and 52.16%, respectively, of its total loan portfolio was attributable to its operations in the northern region of India.

Issue Detail:

Issue Open: Oct 25, 2016 – Oct 27, 2016
Issue Type: Book Built Issue IPO
Issue Size: [.] Equity Shares of Rs 10 aggregating up to Rs 3,000.00 Cr
Face Value: Rs 10 Per Equity Share
Issue Price: Rs. 750 – Rs. 775 Per Equity Share
Market Lot: 19 Shares
Minimum Order Quantity: 19 Shares
Listing At: BSE, NSE
Lead Managers: Kotak Mahindra Capital Co. Ltd, DSP Merrill Lynch Ltd, JM Financial Institutional Securities Ltd, JP Morgan India Pvt. Ltd and Morgan Stanley India Co. Pvt. Ltd

Objects of the issue

Augment the capital base to meet their future capital requirements

Continue to reduce cost of borrowings and raise public deposits;

Continue to maintain the credit quality of  loan portfolio; and Continue to enhance customer delivery by leveraging digital media and continue to develop and strengthen technology platforms.


In India, the housing industry is recognized as having an important impact on the country’s development, civic life and human capital formation. India’s economic growth, coupled with favorable structural factors, such as under – penetration of the mortgage market, the large gap between housing demand and supply, improved affordability as a result of tax incentives, the encouraging regulatory environment and positive demographic trends, is expected to fuel continued growth in the housing finance market. Participants in India’s housing finance market mainly comprise commercial banks, including national banks, private sector banks, regional rural banks, agriculture and rural development banks and state-level apex co-operative housing 52 finance societies, and specialised lending institutions for housing, such as the Company, known as housing finance companies (“HFCs ”). It also includes some smaller institutions, such as microfinance institutions, community – based organisations and self – help groups, as well as other non-banking financial companies (“NBFCs ”).

Total outstanding housing loans as at September 30, 2015 was estimated to be ₹11,300.00 billion, a 17.70% increase since Fiscal Year 2011. IMaCS forecasts that the housing finance market in India will grow 20.00 – 22.00% from Fiscal Year 2015 to Fiscal Year 2020. (Source: IMaCS Report) In particular, the government’s push for affordable housing projects,reductions in interest rates and rising  income levels are expected to contribute towards increased housing demand and improved house buyers’ debt-servicing capabilities, thereby increasing outstanding housing loans in terms of both the number of disbursements and the quantum borrowed under each loan.
(Source: CRISIL Report)

Trend in total housing loan outstanding.

The following graph shows the growth of total outstanding housing loans for banks and HFCs from Fiscal Year 2011 to Fiscal Year 2018.

Growth in total housing finance Disbursment.(Source: CRISIL Report)

NPAs :

Gross NPAs, as a percentage of its total loan portfolio, were 0.20% as of March 31, 2015, which was the lowest among the leading HFCs in India, according to the IMaCS Report, and 0.22% as of March 31, 2016. As of March 31, 2016, 2015 and 2014, its  provision coverage ratio (i.e., the proportion of gross NPAs for which provisions had been made) was 36.25%, 66.82% and 51.47%, respectively
As of March 31, 2016, its  overall Capital to Risk (Weighted) Assets Ratio (“CRAR”) and Tier I Capital CRAR were 12.68% and 9.02%, respectively.

Key Growth Drivers

The key growth drivers in the housing finance industry in India include:

Low mortgage penetration and housing shortage;
Slowing average ticket size growth;
Tax benefits;
Government implemented schemes (including Smart Cities and Housing for All by 2020); and Population growth and changes in demographics.


Strong distribution network with deep penetration of key Indian urban centres

Scalable operating model and centralised and streamlined operational structure

Access to diversified and cost – effective funding sources

Diversified product offering with specific focus on self-employed customers

Customer – centric approach resulting in strong brand recognition

Managed by experienced and qualified professionals with strong industry expertise.

Endurance Technologies Ltd IPO Review


Promoter are involved in certain legal proceedings and any adverse outcome in these or other proceedings may have a material adverse effect on PNBHF reputation, business, financial condition and results of operations.

PNBHF business and financial performance may be adversely affected by volatility in interest rates.

PNBHF may not be able to manage the growth of HF business and loan portfolio effectively or continue to grow.

PNBHF business and loan portfolio at a rate similar to what PNBHF have experienced in the past.

PNBHF face liquidity risks as a result of maturity and interest rate mismatches between PNBHF assets and liabilities.

PNBHF face the risk of default and non – payment by PNBHF customers, in particular self -employed customers.

The Indian housing finance industry is highly competitive and increased competition may lead to a relative decline in average yields and spreads.

PNBHF have had high cost to income ratios and PNBHF may not be able to successfully grow PNBHF’s loan portfolio to derive economies of scale.

PNBHF may face conflicts of interest relating to PNBHF Promoter and key shareholder, PNB.

PNBHF are exposed to risks related to concentration of loans to certain real estate developers and risks associated with construction finance loans.

PNBHF new loan products and services such as loans for affordable housing may expose us to certain risks.

PNBHF business and operations significantly depend on senior management and other key employees and may be adversely affected if PNBHF are unable to retain them.

PNBHF are exposed to fluctuations in real estate prices and any negative events affecting the real estate sector.

PNBHF may not be able to obtain, renew or maintain PNBHF statutory and regulatory permits and approvals required to operate our business. Further, PNBHF have not obtained registration of trademark over PNBHF branding message “Ghar Ki Baat”.

Two of PNBHF’s Group Companies have incurred losses during the last three Fiscal Years, which may have an adverse impact on PNBHF reputation and business.

Group company loss

A slowdown in economic growth in India or global economic instability could result in an adverse effect on PNBHF business, financial condition and results of operations.

The growth rate of India ’s housing finance industry may not be sustainable.


PNB Housing Finance asset quality is better than its peers in the industry as its Gross Non-Performing Assets (NPA) stands at 0.22% as on March 31, 2016. While its peers like HDFC Limited stands at 0.94%, LIC Housing Finance Limited at 0.45%, Dewan Housing Finance Limited at 0.93% and Indiabulls Housing Finance Limited stand at 0.84% for the FY ending 2015-16.

Price to Book Value for PNB Housing Finance Limited post issue is expected to be approximately between 2.3 -2.5 times. While P/B for its peers like Indiabulls Housing Finance Limited stand at 3.6, Housing Development Finance Limited at 6.46, LIC Housing Finance Limited at 3.17 and Dewan Housing Finance Limited at 1.57. So, even though P/B value is higher than Dewan Housing Finance Limited, it is still cheaper than its other peers like Indiabulls Housing Finance Limited, HDFC Limited and LIC Housing Finance Limited.

Comparison with Listed Industry Peers

comparison with Listed Industry peers..Price to Earnings ratio for the company based on the basic and diluted EPS at the bottom end of the price band i.e. Rs. 750 will be 27.19 and at the upper end of the price band i.e. Rs. 775 will be 28.10 as compared to the industry average of 25.98.

However, if you look at the P/E of some of its peers like HDFC Limited, Repco Home Finance Limited and Gruh Finance Limited, as illustrated in the above table, it still has a decent stand.

The Return on Net Worth for the company is at 17.6% for the FY 2015-16 in contrast to the industry average of 21.98% which is at a lower end.

Grey market premium is Rs.50/- at 12.30

Anchor Investor portion  subscribed 30 times


No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.


Remember year 2008s Lehman brother’s subprime crises that traumatize financial institutions, trembled global economy and capital markets across the world. Since then global economy is witnessing periodically hits one after another by way of grace, Spain, Italy’s, European crises, last one i.e. Brexit.

Now it’s time of Germany’s one of the largest bank investment Deutsche bank. No surprise! Reasons are the same  old issues as major corporate frauds, financial mess, over exposure to risk assets, lack of transparency, lust of number one, unhealthy completion .It seems that we are not ready to learn any lessons from the others mistake. At one time Deutsche bank was mixed up in 72 trillion $ of derivatives financial instruments about a quarter of total global derivatives exposure, which is  as on today brought it down to 42trillion $ (only).

Deutsche bank several Vice presidents are being interrogated by Interpol for various corporate fraud.


In any business debt ratio beyond certain admissible level is not acceptable. Deutsche bank very smartly (?) converted debt by using currency swap method.

This issue became more dangerously visible when it’s US subsidiary failed to clear the US stress test & in the investigation US authorities found deutsche guilty of miss selling mortgage back securities. US authorities offered 14 billion $ settlement with minimum amount of fine but deutsche bank CEO not only express his inability to make its payment but anywhere near to that amount due to liquidity crunch.

Wait not all over yet. Three major banks are in trouble Deutsche is just one of them & this is for sure that if it sinks it could take many more banks with it.

Selected Bank fines and settelments

Now the problem is that bank is severally  under-capitalize, should infuse capital. Their capital requirement is 254 % of the market capitalization. But the question is how it will happen? Banks financial derivatives investment appears sound which include interest component along with the principal. Whereas practically some of them are not recoverable. Some of them have cap on loss making circumstances. So the options are very limited.

Turnaround of Deutsche bank is also very limited due to its single arm business as investment banker business with such profitable potentiality. Management is looking several other cost cutting options from staff downsizing to closing operations in some countries including some home branches. Its share is also plummeted heavily & lingering low to its 33 years.

Even if deutsche bank sale its UK & China base insurance business will generate not more than 5 billion $.Sale of equity is also not the option one can consider due to fall in share prices in the market. European Union central bank’s rules are stringent even if Germany wants to bail out package.

Deutsche Bank's Share price

Deutsche bank’s failure will be a major embracement for the Germany & its political leaders who gives lectures to other financially stressed European Union member countries. Though initially German authorities denied any government support but they will not allow to fail & will do all possible efforts to save such major bank. But major concern is of its quantum of financial mess.

More important to see all these developments in the back drop of euro zone developments. Already euro zone economy of the euro zone countries, their banks are in crises, Brexit is imminent. Migration in European countries from war zone countries is already affecting the economy of the member countries including Germany besides their euro zone financial crises.  In such situation failure of any such major bank leads to financial earth quick with its magnitude 5 times more than Lehman brothers problem.

EMI VS SIP ( Be controlled or take control )

But one thing is for sure Germany & Europe  cannot allow to collapse that not only could lead to free fall of global banking but could lead to the entire European Union collapse.

Such major financial catastrophe always results in upsurge of precious metals such as gold, silver due to its safe & secure investment. It is estimated that gold can go up to 1500 to 2000 $ per ounce minimum and silver not less then 50 to 75 $ per kg.

In the given circumstances Indian investors neither required to press panic button immediately nor ignore or buy time with wait & watch approach. Instead of it, should adopt balance approach & start using much neglected strategy SWP i.e. systematic withdrawal plan effectively. Start booking profit of fairly appreciated investments & investing in stocks with strong fundamental background, or schemes with diverse portfolio with investment in blue chip companies.


No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.

Endurance Technologies Ltd IPO Review


Endurance Technologies Ltd (ETL) is the  largest  two – wheeler  and  three – wheeler  automotive  component  manufacturer  in  India  in  terms  of aggregate  revenue  for  FY2015  from  our  selected  product  segments  ( Source:  CRISIL  Research ).  ETL also  have operations in Europe with highly – automated manufacturing facilities in Italy and Germany. Tier one companies are companies that directly supply to OEMs, and ETL are a tier one supplier to OEMs for most of our products.

According  to  the  Aluminium  Casters’  Association  of  India,  ETL are  the  number  one  aluminium  die – casting company  in  India  in  terms  of  actual  output  and  installed  capacity  in  FY2016.  ETL are  a  complete  solutions provider,  providing  end – to – end  services  by  engaging  customers  from  conception  to  end – user  delivery.

ETL development process includes design, development, validation, testing, manufacturing, delivery and after market sale service  for  a  wide  range  of  technology – intensive  auto  component  products  leading  to  better  customer satisfaction  and  diversification of  ETL customer  base.  ETL are  an  innovation – driven  company  with  strong  focus on  research  and  development  (“R&D”),  which  allows  us  to  develop  new  products  suited  to  customer requirements.

In  India,  ETL  manufacture  a  diverse  range  of  technology – intensive  automotive  components  for  the  two – wheeler and  three -wheeler  segments.  ETL also manufacture  specified  components  for  four – wheeler  passenger  vehicles, light commercial vehicles (“LCVs”) and heavy commercial vehicles (“HCVs”).

List of products and services in India include:

Raw and machined aluminum castings, such as high – pressure, low – pressure and aluminum alloy wheels for motorcycles;

Segment wide break up

Break up

Suspension,   such   as   shock   absorbers   for   scooters,   motorcycles   and   three –  wheelers,   front   forks   for motorcycles and scooters and hydraulic dampers for quadricycles;transmission,  such  as  clutch  assemblies,  cork  and  paper – based  friction  plates  for  motorcycles  and  three – wheelers and continuous variable transmission assemblies (“CVTs”) for scooters; brake systems, such as hydraulic disc brake assemblies including calipers, master cylinders and rotary disc brakes  for  motorcycles  and  hydraulic  drum  brake  assemblies  and  tandem  master  cylinder  assemblies  for three – wheelers; and aftermarket services to cater to the replacement market.

Client list includes Bajaj Auto, Suzuki, Royal Enfield, Yamaha, Piaggio, Hero, Honda, Daimler, Chrysler, Tata Motors etc. Company is having major thrust on its R & D capabilities with continuous innovations.

Segment wise share :

Segmant wise shareIt also has tie up with renowned MNCs for specialized suspension and brakes components. Since 2005 the company follows Total Productivity Management (TPM) and puts economies of scale and cost reduction strategies in place.

ETL currently exports to over 20 countries and has 26 distributors in overseas market. In India it has 256 distributors.

Issue Detail:

Open: Oct 5, 2016 – Oct 7, 2016
Type: Book Built Issue IPO
Size: 24,613,024 Equity Shares of Rs 10 aggregating up to Rs 1,161.73 Cr
Face Value: Rs 10 Per Equity Share
QIB : 12306,512 shares
NII : 3691,954 shares
RII :8614558 shares
Total : 24613024 shares
Issue Price: Rs. 467 – Rs. 472 Per Equity Share
Market Lot: 30 Shares
Minimum Investment : Rs.14010/- on lower price band
Listing At: BSE, NSE
Lead Manger : Axis capital and citi group global market

Objects of the Issue :

The objects of the Offer are to achieve the benefits of listing the Equity Shares on the Stock Exchanges and to carry out the Offer for Sale.

Top shareholding Pattern :

TOP 10 Share holdersThe Indian Economy :

India’s  population  is  approximately  1.25  billion,  second  only  to  China.  India  had  an  estimated  GDP  of approximately US$ 7.965 trillion in 2015, which makes it the fourth largest national economy in the world after China,  the  European  Union  and  the  United  States  of  America,  in  purchasing  power  parity  terms (Source:  CIA World Factbook).

India’s GDP grew at 7.2% and 7.3% in 2014 and 2015, respectively, and is projected to grow at  7.5%  in  FY2017.  According  to  the  IMF  Report,  growth  will  continue  to  be  driven  by private  consumption, which has benefited from lower energy prices and higher real incomes. With the revival of sentiment and pickup in  industrial  activity,  recovery  of  private  investment  is  expected  to  further  strengthen  growth. (Source:  IMF Report)

The Global Economy :

Although  financial  markets  have  recovered  most  or  all  of  the  ground  lost  in  the  first  quarter  of  2016,  global economic recovery has slowed due to fear of weakening of the Chinese economy and signs of distress in other large emerging markets, including from falling commodity prices and oil prices.

According to the International Monetary Fund (the “IMF “), the baseline projection for global growth in 2016 is 3.2%, broadly in line with last year.

The  projected  pickup  in  growth  in  2017  (3.5%) hinges  on  rising  growth  in  emerging  market  and developing economies, as growth in advanced economies is expected to remain modest. ( Source: International Monetary Fund, World Economic Outlook, April 2016 (the “IMF Report “)

While  growth  in  the  emerging  market  still  accounts  for  the  majority  of  projected  world  growth  in  2016, prospects across countries remain uneven and generally weaker than over the past two decades. In particular, a number  of  large  emerging  markets –including  Brazil  and  Russia – are  still  mired  in  deep  recessions.  Others, including several oil – exporting countries, also face a difficult macroeconomic environment with sharply weaker terms of trade and tighter external financial conditions. ( Source: IMF Report)

The Two – Wheeler and Three – Wheeler Industry in India India, along with China, are the largest producers of two – wheelers in the world, each contributing approximately one  third  of  the  global  volumes.  Further,  India  is  the  largest  producer  of  three – wheeler’s  in  the  world  and  the sixth largest passenger vehicle producer in the world. (Source: CRISIL Research)

Worst Retirement Mistakes and Remedies to improve them


ETL are the largest two – wheeler and three-wheeler automotive component manufacturer in India in terms of aggregate revenue from ETL’s selected product segments.

Strong research and development and technological capabilities.

Growing and profitable European business.

Continue to pursue strategic alliances and inorganic growth opportunities

Revenues and profits have grown at a compounded annual growth rate of 8.1 per cent (to ₹5,240 crore) and 12.4 per cent (₹291 crore) respectively in the last four years.

Prospects for the European business look good too, with focus on relatively better placed economies such as Germany and Italy.

Improving consumption has also increased demand for small trucks, including three-wheeled ones used in last mile connectivity.

The company’s debt burden has been reduced in the last few years and, consequently the debt to equity ratio has come down to 0.4 times now, from over one time three to four years ago.


There is outstanding litigation against ETL, company’s Subsidiaries, company Directors and Promoter, which if determined adversely, could affect company’s business and results of operations.

There is ongoing criminal litigation involving ETL’s Company’s Promoter and Managing Director, on account of which an adverse outcome could have an adverse effect on company prospects, business,financial condition, results of operations and reputation.

Pricing pressure from customers may adversely affect our gross margin, profitability and ability to increase our prices,which in turn may materially
adversely affect our business, results of operations and financial condition.

ETL business is dependent on certain principal customers, especially Bajaj Auto Limited (“Bajaj”)in India and FCA Italy S.p.A and its group companies (“FCA Italy S.p.A”) in Europe, and the loss of such customers or a significant reduction in purchases by such customers could adversely affect on business, results of operations and financial condition.

ETL are heavily dependent on the performance of the automotive sector in India, particularly the market for two-wheelers in India.

ETL are also dependent on the performance of the automotive sector in Europe for the four – wheeler market. Any adverse changes in the conditions affecting these markets can adversely impact on business, results of operations and financial condition.

ETL are highly dependent on the management team and certain management personnel, especially the engineers in ETL’s research and development team who are involved in the expansion of ETL’s research and development capabilities.

Any loss of such team members or the inability to attract or retain research and development personnel may materially adversely affect ETL’s business performance and research and development efforts.

ETL’s failure to identify and understand evolving industry trends and preferences and to develop new products to meet ETL’s customers’ demands  may materially adversely affect our business.

Company’s success depends in large part upon company Promoter. If company Promoter is unable or unwilling to continue in his present position,it would be difficult to replace and company business, prospects and results of operations could be materially adversely affected.

ETL may not be successful in implementing company’s strategies, such as expanding company’s business in the passenger car, LCV and HCV segments of the automotive components market,outsourcing company’s non-critical processes to outside vendors and expanding company’s presence in the after-market segment, which could adversely affect company’s business, results of operations and future prospects.

The geographical concentration of company’s manufacturing facilities may restrict company’s operations and adversely affect our business and financial conditions.

ETL have experienced growth in the past few years and if company are unable to sustain or manage company’s growth, business, results of operations and financial condition may be materially adversely affected.

ETL’s alliances may not perform their obligations satisfactorily and their interests may differ from ETL, which could have a material adverse effect on company’s business and results of operations.

ETL depend on third parties for the supply of raw materials and delivery of products and such providers could fail to meet their obligations, which may have a material adverse effect on ETL’s business, results of operations and financial condition.

Company are subject to counter party credit risk and any delay in receiving payments or non-receipt of payments may adversely impact company’s results of operations.

Company failure to keep company’s technical knowledge confidential could erode company’s competitive advantage.

Company may not have sufficient insurance coverage to cover company’s economic losses as well as certain other risks including those pertaining to claims by third parties and litigation.

ETL have significant power, water and fuel requirements and any disruption to power or water sources could increase company’s production costs and adversely affect company’s results of operations.

any increase in Indian interest rates or inflation;

any exchange rate fluctuations;

changes in India’s tax, trade, fiscal or monetary policies;

prevailing regional or global economic conditions, including in India’s principal export markets; and other significant regulatory or economic developments in or affecting India or its IT sector.

Any slowdown or perceived slowdown in the Indian economy, or in specific sectors of the Indian economy.

Changes in trade policies may affect.

Valuation & Recommendation :

For  FY2015  and  FY2016,  our  total  revenue  contribution  from  India  was  71.5%  and  70.1%,  respectively, while our total revenue contribution from Europe was 28.5% and 29.9%, respectively.

Endurance technologies Ltd. stands to gain from operating leverage. At a P/E of 22.8 x we believe that Endurance technologies Ltd. demand a discount to its domestic peers.

Comparison with its peersComparison with its peersInvestment strategy :

Current Grey market premium @ Rs. 75/- and Kostak is Rs. 700/- ( 05/10/2016 at 1.00 p.m. )


No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.