PNB Housing Finance shares hit a fresh 52-week high price of Rs 762.50 apiece on Thursday, zooming 10 percent. The Punjab National Bank's mortgage arm's share price has been hitting the upper circuit for the fourth consecutive day.

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PNB Housing stock price has rallied over 77 percent this week, while the one-month gain is 106 percent. The one-year return on the stock has been more than 291 percent.

On May 31, the company announced that its board approved a capital raise of up to Rs 4,000 crore, led by entities affiliated to Carlyle Group Inc.

Pluto Investments S.a.r.l., an affiliated entity of Carlyle Asia Partners IV, L.P. and Carlyle Asia Partners V, L.P. will invest up to Rs 3,185 crore through a preferential allotment of equity shares and warrants, at a price of Rs 390 per share, the company had said in a regulatory filing.

Existing shareholders of the company, funds managed by Ares SSG and General Atlantic, are also participating in the capital raise.

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PNB Housing Finance shares hit 20% upper circuit after board approves raising Rs 4,000 cr

An additional trigger for the stock price was that as part of this transaction, Salisbury Investments Pvt. Ltd., the family investment vehicle of Aditya Puri, Senior Advisor for Carlyle in Asia and the former CEO & Managing Director of HDFC Bank, will also invest in the capital raise.

Aditya Puri is expected to be nominated to the PNB Housing Finance board as a Carlyle nominee director in due course, it said.

Puri joining the Board would be a positive for business strategy as well as investor confidence, brokerage firm Motilal Oswal said.

“Key benefits of the capital raise are a decline in leverage to sub-5x, with CRAR increasing to 28 percent; the phase of Balance Sheet consolidation, witnessed over the past 1-2 years, will now be behind it and the company would be able to deliver loan growth in line with peers, and with increased capitalization, the cost of funds should reduce gradually,” the brokerage added.

Also Read: PNB Housing will emerge as a better player: Sudhin Choksey

“The key objective of raising capital is to augment capital adequacy, reduce gearing and accelerate growth with a focus on retail housing including self-employed and affordable housing loans such as the Unnati segment,” the company said.

Assuming full capital infusion (including warrants) and no other change to the March 31, 2021 financials, the capital adequacy ratio of the company as of March 31 would increase from 18.7 percent to over 28 percent and gearing as of March 31 will decline from 6.7x to less than 5x.

On April 27, PNB Housing Finance had reported a consolidated net profit of Rs 127 crore for the quarter ended March 2021. The company had posted a net loss of Rs 242 crore in the same quarter a year ago. Its total income during Q4FY21 declined to Rs 1,834 crore from Rs 1,952 crore, YoY.

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(Edited by : Ajay Vaishnav)