Karvy Stock Broking has rated Punjab National Bank as a buy with a target price of Rs 627 in its August 1, 2008 research report. "In 1QFY09, Punjab National Bank's reported net interest income of Rs 14.5 billion lower than our expectations mainly due to higher cost of funds; NIM also drifted down by 32 bps to 3.27%. The bank reported marginal growth of 5.6% (Y-o-Y) to Rs 4.6 billion. Contained operating expenses and lesser provisions led to 20.5% growth in bottomline."

"We are reducing our price target by 5.8% to Rs 627 per share to account for higher cost of funds; the bank may not be able to completely pass-on the higher cost of deposits going forward reflecting strain on margin. We reduce our earning estimates by 5.2% in FY2009 and 7.3% in FY2010. We rate the stock as a BUY with a target price of Rs 627 at 1.5x ABV FY2010," says Karvy's research report.

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