Punjab National Bank (PNB) Shares Surge 7% After Q1 Results: Buy, Sell, or Hold?

Stock Market Update: PNB Shares Surge Over 7% Following Q1 Results

Punjab National Bank (PNB) saw its share price rise by more than 7% in early Monday trading. This followed the announcement of its Q1 results over the weekend.

Punjab National Bank Opening Surge

PNB shares opened at ₹124.86, nearly 4% higher than the previous close of ₹119.95 on the NSE. The price continued to climb, reaching an intraday high of ₹128.66. This marked gains of over 6%.

Record Quarterly Profit

PNB reported its highest-ever quarterly standalone profit of ₹3,252 crore. This was driven by increased interest revenue and reduced bad loans. The net profit showed a significant year-on-year increase of 159%.

Improved Net Interest Income

The net interest income (NII) for PNB rose by 10.2%, reaching ₹10,476.2 crore in Q1 of the current fiscal year. This was up from ₹9,504.3 crore in the same period last year. The growth was attributed to the difference between the interest earned and paid.

Analysts’ Insights of Punjab National Bank

Jefferies India Pvt Ltd

Analysts at Jefferies India Pvt Ltd have set a target price of ₹150 for PNB stock. This indicates a potential upside of around 20%. They noted that Q1FY25 asset quality remained strong and expect the earnings rebound to continue. Despite a slightly lower-than-expected net profit due to higher operating expenses related to Priority Sector Lending Certificates (PSLCs), which are not expected to recur, Jefferies highlighted positive factors. These include lower slippages at 0.8% and strong recoveries. With coverage at 88%, they anticipate low credit costs for the next 1-2 years. They project a Return on Assets (ROA) of 0.9% in FY26, with potential tax rate reductions further boosting ROA. They find the stock’s valuation reasonable at 1.1 times adjusted price-to-book value based on FY25 estimates. Jefferies rates PNB shares as a ‘Buy’ with a target price of ₹150.

Motilal Oswal Financial Services

Motilal Oswal Financial Services (MOFSL) has revised their Earnings per Share (EPS) estimates upward by 5.6% and 0.8% for FY25 and FY26, respectively. This is due to lower provisions, healthy NII, and steady margins. They project an ROA of 1.0% and a Return on Equity (ROE) of 14.5% in FY26. MOFSL has set a target price of ₹135 for PNB shares.

Kotak Institutional Equities

Kotak Institutional Equities commented that PNB’s asset quality remains strong. The net Non-Performing Loan (NPL) ratio is 0.6%, comparable to that of the State Bank of India. The slippage ratio was recorded at 0.8%, and bad loan recoveries were robust. They noted a 12% year-on-year growth in advances, driven by retail and agriculture sectors. However, they consider the stock’s valuation to be high. Kotak has set a target price of ₹110.

These varied perspectives highlight cautious optimism among analysts regarding PNB’s future performance, with differing views on the stock’s current valuation and growth potential.

Disclaimer: The views and recommendations expressed are those of individual analysts or brokerage firms and not of KG-Updates. We recommend investors consult certified experts before making any investment decisions.

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