Punjab National Bank share price target

Resilient Recovery: How Asset Quality Reforms Revived

Punjab National Bank (PNB) reported a healthy 3QFY25 PAT of INR45.1b (103% YoY growth, 24% beat), primarily driven by provisioning reversal.

Strong asset quality trends continued to drive earnings and RoA although operating performance was muted. NII at Rs. 11,032 crore (above estimates) grew by 7% y-o-y/5% q-o-q. NIMs were broadly stable, improved by 1 bps q-o-q to ~2.93%. Interest on IT refund & interest income from NPA recoveries,

PNB reported 145% y-o-y earnings growth aided by ~92% y-o-y decline in provisions and ~10% y-o-y
growth in operating profit resulting in RoA/RoE at 1.0%/ 14.7%.

Punjab National Bank (PNB) reported a 1QFY25 PAT of INR32.5b (8% beat), led by sharply lower provisions (67% YoY decline).

Sustained improvement in asset quality trends is resulting in lower credit cost. Earnings were above estimates in Q1FY25 driven by lower credit cost resulting in RoA at 0.82%.

? Earnings were marginally above estimates in Q4FY24 mainly led by lower provisions. Core credit cost stood at 0.85% annualised versus 1.3% q-o-q.

NII rose 22.8% QoQ in Q3FY22, led by a 54bps QoQ expansion in NIM. Operating income rose 9.0% QoQ to Rs. 10,504cr; PAT down 2.0% QoQ owing to higher tax outgo and marginally higher provisions. With improved outlook of certain sectors such as infra (incl. telecom) and metal & mining industry, we expect further strengthening of bank's financials with gradual recovery expected in accounts marked as NPAs. Bank has reported steady improvements in its asset quality along with reduction in slippages. However, the NPA levels remain high....

With synergies coming in post amalgamation and improvement in efficiencies, the Bank was able to deliver a decent operational performance. However, asset quality still remains a concern considering high exposure to Agri and MSME sectors. Hence, with a cautious view on outlook, we reiterate our HOLD rating on the stock with a revised target price of Rs. 42 based on 0.4x FY23E P/BV. Significant cost reduction support margins For Q1FY22, Interest Income dropped 8.3% YoY to Rs. 18,921cr as yield from advances...