Buy Punjab National Bank; target of Rs 125: Sharekhan

Sharekhan's research report on Punjab National Bank

PNB reported 145% y-o-y earnings growth aided by ~92% y-o-y decline in provisions and ~10% y-o-y growth in operating profit resulting in RoA/RoE at 1.0%/ 14.7%. Bad loan recoveries stayed strong leading to net slippages negative at Rs. 734 crore. Net NPL ratio touched ~0.46% (lowest in decadal) and better than its large peers. Business momentum was healthy. Advances/ deposits grew by 4% q-o-q/ 4% q-o-q. However, core PPoP was weak, declined by 11% y-o-y led by higher employee benefit provisions under IND AS-15 along with muted NII/ fee. NIMs fell by 15 bps q-o-q to 2.9%. Stock trades at 0.9x/ 0.8x its FY2025E/FY2026E ABV.

Outlook

We maintain Buy with a revised PT of Rs. 125, given bad loan recoveries to continue to drive profitability and support RoA trajectory as the overall bad loan pool is still quite large at ~Rs140,000 crore.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Punjab National Bank - 21112024 - khan