Shares of Punjab National Bank (PNB) scaled a fresh 52-week high in early trade on November 25, after the lender announced that it has received Government of India's approval for stake sale in UTI Asset Management Company.
"The Exchange is hereby informed that the bank has received approval of DIPAM, Ministry of Finance for divestment of entire/part stake in UTI AMC in single or multiple tranches subject to compliance of SEBI regulations," PNB said in a stock exchange filing after market hours on Thursday.
At 9:30 am, the PNB shares were up 6 percent, hitting a fresh high of Rs 53.90 apiece on the National Stock Exchange (NSE). UTI AMC's stock also gained 6.53 percent on back of this development. The scrip quoted at Rs 733 on the NSE.
As of now, PNB holds 15.22 percent stake in UTI AMC. The objective behind the stake sale is to realise gains on investment, the public sector lender said.
The timeline and value of the divestment is yet to be decided.
UTI AMC is promoted by four sponsors - State Bank of India, Life Insurance Corporation of India, Bank of Baroda and Punjab National Bank - collectively holding 45.16 percent of the shares of UTI AMC.
In Q2FY23, PNB reported a 63 percent decline in standalone net profit to Rs 411 crore on account of higher provisioning for bad loans. The bank had posted a net profit of Rs 1,105 crore in the year-ago period.
The state-owned lender's net interest income increased by 30.2 percent to Rs 8271 crore in the quarter as compared to the same period a year ago. While the stock has gained 42 percent in 2022 so far, Emkay Global has a Sell rating with target price of Rs 30 apiece.
"Bank reported subdued profitability, mainly due to higher provisions, as it looks to shore up PCR. Asset quality continues to improve, on the back of improved recoveries/write-offs, although it still remains sub-par compared with peers," it noted.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.