"PNB’s Q2FY15 PAT at Rs 5.8bn came in sharply below estimates due to a 24bps decline in NIMs, higher staff expenses and provisions, but partly supported by greater other income. Asset quality deteriorated significantly with slippages/restructuring remaining high at Rs 39.7bn/Rs 32.9bn (5.1%/ 4.2%). While the bank’s performance remains volatile, we are positive on the stock given a decent CETI of 8.4%, a healthy domestic CASA ratio of 40%, and reasonable valuations of 1.0x FY16E ABV."
"With a calibrated approach to growth, PNB is well-placed among PSU banks to benefit from an economic recovery, which in turn should translate into lower credit costs for the bank. We remain positive on the stock given PNB’s comfortable capital position, a healthy domestic CASA ratio, and reasonable valuations. Maintain BUY with a TP of Rs 1,250", says Religare Capital research report.
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