Morgan Stanley has turned relatively more constructive on PNB Housing Finance after its June-quarter performance, saying the lender’s improving retail loan growth, stronger market share trends and attractive valuation strengthened its investment case. At the same time, the brokerage continued to prefer PNB Housing Finance Ltd. Housing Finance over LIC Housing Finance. According to the international brokerage house, the latter faced weaker growth in its core retail franchise and continued to lose ground in the home loan market. While Morgan Stanley raised its target price on PNB Housing Finance, it retained an ‘Underweight’ view on LIC Housing Finance. Morgan Stanley retained its ‘Overweight’ rating on PNB Housing Finance and raised its target price to Rs 1,420 from Rs 1,405, implying an upside of 27% from the reference price used in the report. The brokerage said the company’s June-quarter performance reinforced its positive view and prompted it to raise loan growth estimates for FY27 through FY29. The brokerage said underlying retail loan disbursements increased by more than 50% year-on-year, after adjusting for an accounting change, while retail loan accretion exceeded its expectations. Morgan Stanley now expects retail loans to grow at around 20% over FY26 to FY29 and believes the company is well placed to sustain that momentum as its presence in affordable and emerging housing finance expands. Morgan Stanley also said net interest margins had likely bottomed and expected the loan mix to improve over the coming years as higher-yielding affordable and emerging housing loans account for a larger share of the portfolio. It added that the company’s secured loan book leaves it better positioned than many non-banking financial companies if the interest-rate environment remains volatile. The brokerage wrote, “1Q underlying disbursements grew 50%+ YoY – a major pickup, which management expects to continue.” It also said, “We see re-rating potential.” Morgan Stanley said PNB Housing Finance had continued to strengthen its retail franchise, while LIC Housing Finance faced weaker operating momentum. According to the brokerage report, PNB Housing Finance maintained its post-pandemic home loan market share and delivered consistent improvement in retail loan growth, whereas LIC Housing Finance continued to lose market share in individual home loans. The brokerage also believed PNB Housing Finance offered a stronger earnings profile because of faster loan growth and improving return on equity. It said the lender’s retail-focused strategy and changing loan mix should support profitability over the medium term, while LIC Housing Finance remained more exposed to slower-growing segments. Morgan Stanley wrote, “PNB Housing Finance is showing consistent improvement in retail loan growth and sustained home loan market share.” In contrast, it said, “LIC Housing Finance is a weakening franchise accompanied by low growth in individual segments (Housing Loans and Loan Against Property) and losses of home loan market share.” Morgan Stanley retained an ‘Underweight’ rating on LIC Housing Finance. The report did not provide The brokerage house said LIC Housing Finance continued to face slower growth in its individual lending business, particularly across Housing Loans and Loan Against Property. It also pointed to a decline in home loan market share and said the company’s franchise was losing momentum compared with peers. Morgan Stanley argued that PNB Housing Finance’s stronger retail execution, improving loan mix and better growth outlook justified its preference within the housing finance space, even as both companies operated in the same sector. Morgan Stanley’s latest assessment drew a sharp distinction between the two housing finance companies. The brokerage became more constructive on PNB Housing Finance after the June quarter, citing accelerating retail loan growth, improving market share and the potential for a valuation re-rating. At the same time, it maintained a cautious view on LIC Housing Finance, saying weaker growth in its retail franchise and declining home loan market share kept it less attractive than PNB Housing Finance. Disclaimer: Stock market performance, target prices, and brokerage ratings mentioned in this report are for informational purposes only and do not constitute investment advice or a recommendation to buy, sell, or hold any security. Brokerage reports reflect the analyst’s independent view at a specific point in time and are subject to market volatility, liquidity risks, and shifting economic conditions. Investors should consult a SEBI-registered investment advisor or qualified financial consultant before making any investment decisions. This disclaimer has been generated using AI to support user well-being and responsible content consumption.