Neutral Punjab National Bank; target of Rs 100: Motilal Oswal

Motilal Oswal's research report on Punjab National Bank

Punjab National Bank (PNB) reported a healthy quarter, with a 19% beat on PAT amid 23% lower provision vs. our estimate. PAT surged 254% YoY to INR22.2b, while NII grew 12% YoY (in line) to INR103b as NIMs improved 4bp QoQ to 3.15% in 3QFY24. Loan book grew at a healthy pace of 15% YoY (3% QoQ) to INR9.2t, led by a healthy traction in corporate. Retail loans declined 1.8% QoQ. Deposit growth was relatively low at 9% YoY/1% QoQ to INR13t. The C/D ratio was relatively low at 69%, giving levers to accelerate advances unlike other banks. The CASA ratio increased 32bp QoQ to 42.5%. Slippages dipped to INR18b (0.9% annualized) enabling sharp 72bp/51bp QoQ decline in GNPA/NNPA ratios to 6.24%/0.96% while PCR rose 540bp QoQ to 85%.

Outlook

We upgrade our EPS estimates by 15%/5% for FY24/FY25, factoring in lower LLP and healthy margins. We estimate RoA/RoE of 0.7%/11.0% in FY25 and 0.9%/13.1% by FY26. Retain Neutral with a TP of INR100 (1x Sep’25E ABV).