Hold Punjab National Bank; target of Rs 160: ICICI Direct
ICICI Direct recommended hold rating on Punjab National Bank with a target price of Rs 160 in its research report dated May 17, 2017.
ICICI Direct's research report on Punjab National Bank
PNB had highest RoA, RoE among PSU banks in FY08-10. However, it took a huge knock as deteriorating asset quality led to elevated provisioning, loss of net interest income. Despite gradual growth in business, core earnings stayed weak led by higher slippage.
Though we expect slippages to moderate ahead, uncertainty looms in near term on slippages from watchlist and RA book. Hence, we maintain our target price at Rs 160, valuing standalone bank at 1.6x FY19E ABV and housing finance subsidiary at 2x FY19E ABV. With the recent run-up in stock price, we downgrade our rating to HOLD.
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