Edelweiss is bullish on Punjab National Bank has recommended buy rating on the stock with a target price of Rs 180 in its research report dated May 18, 2017.
Edelweiss' research report on Punjab National Bank
Punjab National Bank’s (PNB) Q4FY17 PAT at INR 2.6bn came lower than estimate due to elevated credit cost and lower revenue. However, staff expense reversal and treasury gains cushioned the impact. Though fresh slippages at INR 69bn (>7%) continued to be high, higher write‐offs and better upgrades/recoveries restricted GNPLs to INR 554bn (flat QoQ).
Given weak RoE, the bank is not our preferred pick. However, valuation of <0.8x FY19E P/BV post factoring in potential stress and contribution from subsidiaries renders favourable risk‐reward. We maintain ‘BUY/SP’ with target price of INR 180. Transition with new MD & CEO at the helm and resolution of stressed loans are key monitorables.
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