PNB stock gains on strong Q4 results, but brokerages give 'sell' call amid expensive valuations

Analysts at Kotak Institutional Equities shared a 'sell' rating on PNB, saying that the stock has seen a sharp rally recently

Shares of Punjab National Bank gained 1.8 percent to Rs 124.3 apiece on May 10 after profit more-than-doubled year-on-year (YoY) to Rs 3,010 crore in January-March (Q4FY24) quarter. However, brokerages maintained 'sell' calls on the public lender, citing expensive valuations.

So far this year, shares of PNB surged over 29 percent, outperforming 1 percent rise in the benchmark Nifty 50 index. Earlier, PNB stock hit 52-week high of Rs 142 per share on April 30, 2024.

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Analysts at Kotak Institutional Equities shared a 'sell' rating on PNB, saying that the stock has seen a sharp rally recently. "We value the bank at 1x BVPS (adjusted) and 8x March 2026E EPS for RoEs of 12 percent in the medium term," they said, with a target price of Rs 105 per share.

Nirmal Bang also shared a 'sell' call on PNB, with a target price at Rs 110 per share, reflecting a downside of over 12 percent from current levels. Analysts upped earnings estimate for FY26 by 3.5 percent, but forecasted return on asset (RoA) and return on equity (RoE) remains lower at 0.8 percent and 12 percent for FY26, respectively.

ALSO READ: Punjab National Bank Q4 results: Net profit zooms 160% to Rs 3,010 crore

PNB's net interest income (NII) rose by 9 percent YoY to Rs 10,363 crore in Q4FY24. The lender's capital adequacy ratio for the quarter stood at 15.97 percent in the March-ended quarter, as compared with 14.63 percent in the previous quarter.

Apart from that, asset-quality for the lender improved with gross non-performing asset ratio down 51 basis points (bps) sequentially to 5.73 percent. Net NPA ratio, too, improved to 0.73 percent in Q4FY24 from 0.96 percent in the previous quarter.

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