PNB Housing shares: PNB Housing soars 95% in a week. What should investors do?

New Delhi: Shares of have rallied over 90 per cent in just five days and has been hitting the upper circuit limits since Monday, May 31 after the company board approved raising of Rs 4,000 crore from the US-based Carlyle group.

On Friday, the stock gained 10 per cent to settle at Rs 838 and scale a new 52-week high. On Monday, it rose a further 5 per cent to set a new 52-week high of Rs 880. The scrip has gained 95 per cent from Rs 450 within a week.

Yash Gupta, Equity Research Associate, Angel Broking, said long-term investors can remain invested in the stock, as it would be a one-of-a-kind turnaround story in the housing finance sector.

“There may be some volatility in the near term, but long-term prospects seem bright. Short-term investors can book 50% profit at this stage and keep a trailing stop loss on the remaining exposure,” he said.

Carlyle and its affiliated funds will invest up to Rs 3,185 crore in the housing finance company through a preferential allotment of equity shares and warrants. Then, Carlyle along with Salisbury Investments will make an open offer for a further 26 per cent stake in the company

Ashis Biswas at CapitalVia Global said the clearance of nearly Rs 4,000 core of capital infusion through the preferential share and warrants would help the company gain market share in the affordable housing and self-employed market categories.

PNB Housing Finance has been on the hunt for capital and to reduce the promoter’s stake in the business. PNB will continue to function as promoter and a key shareholder of the home finance firm.

“The company significantly improved its online distribution and processing of loan applications in recent times. It will help the firm reduce the time between application to disbursement of loans and gain market share,” he said.

Shares of PNB Housing Finance are still trading at half their all-time peak of Rs 1,634 hit in September 2017. The stock had been listed on BSE at Rs 863 on November 7, 2016.

In November 2020, Aditya Puri, HDFC Bank’s former CEO, joined Carlyle group as a senior adviser. Puri is likely to take up a board position in PNB Housing, as Carlyle’s nominee.

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