PNB shares at Rs 80? PSU bank may clock up to 470% rise in Q1 profit

Shares of Punjab National Bank (PNB) have consistently been reporting robust earnings in the last several quarter and analysts believe wholesale book of the PSU bank has cleaned up significantly with further recoveries likely in FY24. For the March quarter, a host of brokerages see up to 470 per cent surge in year-on-year profit growth.

On Monday, the stock was trading flat at Rs 60.45 on BSE. The stock is up 17 per cent in the last one month and 95 per cent in the last one year.

"We expect the PNB’s loan book to fatten cautiously at CAGR of 11-12 per cent over FY23-25E, led by retail book growth. In our opinion, the bank’s credit cost will normalise further by FY24E and estimate return ratio ROA/ROE of 0.5 per cent and 7.8 per cent in FY25E. We value the standalone entity at 0.7 times FY23E BVPS of Rs 105 and value of associates and subsidiaries at Rs 7 to arrive at a target price of Rs 80," LKP Securities said on Monday.

LKP Securities said PNB's credit growth was robust in FY23 and it may remain in same trajectory for FY24, adding that bank’s net interest margin (NIM) to stay intact as MCLR book (35 per cent) re-pricing is underway.

PNB Q1 results preview

Sharekhan expects PNB to report 469.80 per cent YoY rise in net profit to Rs 1,755 crore on 27.90 per cent YoY rise in net interest income (NII) at Rs 9,650 crore. Pre-provision operating profit is seen rising 16.2 per cent YoY to Rs 6,250 crore. Advances growth is likely to be higher than industry growth, Sharekhan said as it set a target of Rs 64 on the stock.

Elara Securities sees profit at Rs 1,007.40 crore, up 226.60 per cent YoY. This brokerage has a lower target of Rs 53 on the stock. Motilal Oswal sees profit at Rs 1,486.20 crore, up 381.80 per cent. The pace of reduction in net NPA and return on asset (RoA) recovery remains the key monitorable, this brokerage said. This brokerage sees gross NPA at 8.3 per cent against 8.7 per cent QoQ.

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