Buy Punjab National Bank; target of Rs 122: Sharekhan

Sharekhan's research report on Punjab National Bank

PAT stood at Rs. 2,223 crore, beating estimates, led by stable NIMs and lower credit cost. Core credit cost stood at 1.3% vs 1.4% q-o-q. Asset quality improved sharply with GNPA and NNPA ratios falling by 72 bps/51 bps q-o-q to 6.24%/0.96%. PCR improved to ~85% vs. 80% q-o-q. Net slippages stayed negative at Rs. 1,253 crore for the fourth consecutive quarter. Bank has been guiding that quality of loans sanctioned in the past 3 years is far superior with very low delinquency. Thus, lower slippages trends is likely to sustain.

Outlook

RoA to improve sharply closer to ~1% in FY25E. At CMP, the stock trades at 1.0x/ 0.9x its FY2025E/FY2026E BV. We maintain Buy with a revised PT of Rs. 122.

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