Prabhudas Lilladher is bullish on Punjab National Bank
(PNB) and has recommended buy rating on the stock with a target of Rs 1025 in its January 31, 2013 research report.
“PNB reported a beat in Q3FY13, driven by a surprise jump in recoveries/upgrades. Operating metrics continue to remain weak and so did delinquencies. However, the key positive was ~40% recoveries/upgrades of Rs76bn of H1FY13 slippages, indicating that PNB may have possibly been more conservative in recognizing NPAs. We maintain our view that credit costs will continue to remain high for PNB but despite deterioration in asset quality, PNB will be able to maintain ROAs of +1-1.1% and ROEs of +16.5. Hence, valuations at <1x FY14 is undemanding. Retain PNB as a contrarian PSU bank; .BUY. with a PT of Rs1025/share (1.1x FY14 book).”
“PNB reported high gross slippages of Rs29bn (4% annualized) and also ~Rs37bn of restructuring highlighting continued stress in PNB’s book. With management now completely focused on recoveries, overall upgrades/recoveries jumped to ~Rs30bn, of which, ~90% was upgrades from H1FY13 slippages, indicating that PNB has been conservative in recognizing NPAs. Management indicated that recovery trends in Jan-13 remained very strong and could surprise positively even in Q4FY13. Though we remain concerned on high slippages, asset quality trends indicate that management could have been more conservative in NPA recognition and net delinquency numbers could surprise positively v/s muted expectations,” says Prabhudas Lilladher research report.
Non-Institutions holding more than 90% in Indian cos
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