By Nishit Navin and Vivek Kumar M
(Reuters) -Shares of India’s PNB Housing Finance were on course for their worst single-session fall in nearly seven years on Friday, as its CEO’s surprise resignation sparked concerns over the growth of its profitable affordable housing segment.
The home financier’s shares fell more than 17% to a four-month low of 813 rupees in Mumbai and were on track for their sharpest fall since October 19, 2018. India’s benchmark Nifty 50 index fell 0.6% in the wake of steep U.S. tariffs.
Girish Kousgi, who was named PNB Housing’s MD and CEO in October 2022, will step down from his post on October 28 this year, the lender said after market hours on Thursday, adding that the search for a successor has kicked off.
The lender’s strategic shift towards affordable and emerging housing had led to analysts raising their ratings on its shares as competition in the segment is relatively benign, according to Pranav Gundlapalle, senior research analyst at Bernstein.
“The CEO – who came from an affordable housing background at Can Fin Homes – was widely seen as the architect of this transformation. His resignation now casts doubt on the continuity of this strategy,” Gundlapalle said.
If the affordable housing focus were to be unwound, PNB Housing risks becoming like other housing finance companies, which face significant challenges in competing with banks, according to the analyst.
SBI Securities said the CEO’s resignation is a negative for the stock in the short term.
PNB Housing Finance’s assets in the affordable housing segment more than doubled year-on-year to 57.44 billion rupees ($656.86 million) for the quarter ended June 30.
On Thursday, the housing finance company said that its “strategic priorities, business focus, and growth trajectory remain firmly intact, based on the strong foundation that Kousgi has helped build”.
Nearly 30 million shares changed hands as of 2:47 p.m. IST, 27 times the 30-day average.
($1 = 87.4460 Indian rupees)
(Reporting by Vivek Kumar M and Nishit Navin; Editing by Mrigank Dhaniwala)
