Punjab National Bank Ltd (PNB) shares are off 17 per cent from their recent high and if one were to go by Nirmal Bang Institutional Equities, the stock could be accumulated at prevailing levels. The broking firm has upgraded its rating on the PNB stock to ‘Accumulate’ from 'Sell' earlier, upping its target price to Rs 120 from Rs 110 earlier.
The PSU bank stock fell 5.18 per cent to hit a low of Rs 117.90 on BSE. It eventually settled the day at Rs 119.20, down 4.14 per cent. The stock hit a 52-week high of Rs 142.90 on April 30.
"With continued traction in recoveries, lower slippages and falling requirement for aging provisions, we have reduced our credit cost estimate for FY26 from 1.1 per cent to 0.9 per cent. We have revised our earnings estimates by 9.9 per cent, which results in a RoA/RoE of 0.9 per cent/13.2 per cent in FY26," it said.
Nirmal Bang hosted PNB's MD & CEO Atul Kumar Goel. The management kept its FY25 guidance on key financial parameters unchanged including loan growth of 11-12 per cent, NIM of 2.9-3 per cent, credit cost of less than 1 per cent, exit RoA of 1 per cent in FY25, it said.
"With comfortable LDR (70 per cent), higher LCR (150 per cent) and excess SLR (Rs 70,000-80,000 crore), the bank has good liquidity position to support credit growth. Proportion of RAM to improve to 60 per cent in 2-3 years. NIM to be lower than last year due to competition in AAA-rated corporate loans. Recoveries per quarter to be Rs 4,500-5,000 crore in FY25," Nirmal Bang said.
Nirmal Bang said due to PCR (including technical write-offs at 95 per cent), the requirement of ageing provisions has abated.
Incremental credit cost, it said, would also be lower due to lower slippages target of less than 1 per cent.
PNB does not expect any major impact of loan waivers being announced by state governments as it will be compensated by the respective states, Nirmal Bang said.
"PNB has obtained Board’s approval for raising Rs 7,500 crore through QIP, Rs 7,000 crore in AT-1 bonds and Rs 3,000 crore via Tier-II bonds. The CET-1 will be positively impacted by Rs6-7bn due to new investment norms," it said.