Buy Punjab National Bank; target of Rs 135: Motilal Oswal

Motilal Oswal is bullish on Punjab National Bank has recommended buy rating on the stock with a target price of Rs 135 in its research report dated October 18, 2025.

Broker Research

October 24, 2025 / 11:43 IST

BUY

26 Aug, 2025 12:21

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Motilal Oswal's research report on Punjab National Bank

Punjab National Bank (PNB) reported 2QFY26 PAT of INR49b (14% YoY growth, in line) amid lower-than-expected opex, partly offset by lower other income and higher-than-expected provisions. NII remained broadly flat YoY/declined 1% QoQ to INR104.7b (inline), while NIMs contracted 10bp QoQ to 2.6%.Other income declined 5% YoY and 18% QoQ to INR43.4b (11% miss). Total revenue, thus, declined 2% YoY/7% QoQ to INR148.1b (4% miss). Loan book grew 11% YoY (4% QoQ), while deposits grew 11% YoY (2% QoQ). As a result, the CD ratio increased to 70.1%. Slippages stood at INR19.6b vs INR18.9b in 1QFY26. GNPA/NNPA ratios improved 33bp/2bp to 3.45%/0.36%. PCR ratio stood at 90%. We fine-tune our earnings estimates and expect RoA/RoE at 1.03%/15.4% in FY27E. Reiterate BUY with a TP of INR135 (1.0x FY27E ABV).

Outlook

With annualized slippage ratio maintained at 0.7%, against the bank’s guidance of 1%. The SMA-2 book (with loans over INR50m) remains steady at 0.17% of domestic loans. We fine-tune our earnings estimates and expect RoA/RoE at 1.03%/15.4% in FY27. Reiterate BUY with a TP of INR135 (1.0x FY27E ABV).

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