PNB shares in focus as board approves raising of Rs 7,500 crore capital in FY25

Shares of Punjab National Bank will be in focus on Friday morning after the state-run bank said its board of directors approved the proposal for raising of equity capital for an amount, aggregating upto Rs 7,500 crore in one or more tranches during FY 2024-25 through qualified institutions placement (QIP) or follow on public offer (FPO) or any other permitted mode or a combination thereof, in accordance with the provisions.

In a filing to BSE, PNB said: "the exchange is hereby informed that the board of directors of the bank in its meeting held today, has approved the proposal for raising of equity capital for an amount aggregating upto Rs 7,500 crore in one or more tranches during FY 2024-25 through Qualified Institutions Placement(QIP) or Follow on Public Offer (FPO) or any other permitted mode or a combination thereof, in accordance with the provisions of the applicable Acts/Regulations/Guidelines and subject to receipt of requisite approval."

Besides, the bank said it has issued and allotted Basel Ill Compliant Additional Tier-I Bonds at a coupon of 8.55 per cent per annum, aggregating to Rs 1,153 crore on private placement basis.

The PSU bank has a wide distribution network, comprising of 10,000 branches and 12,645 ATMs. The bank caters across customer segment including corporate, retail and MSME sectors. As on September 30, global deposit base stood at Rs 13 lakh crore and advances at Rs 9.4 lakh crore.

"Post elevated delinquencies and provisioning impacting earnings in past fiscals, the bank is now well poised to benefit from sectoral tailwinds in terms of growth as well as earnings. Increased focus on retail segment is expected to enable the bank to deliver revival in credit off-take momentum. Moderation in slippages and gradual improvement in provision coverage is seen to aid margins trajectory as well as earnings," ICICIdirect said in a note.

The brokerage said PNB's valuation at below book offers comfort and provides a opportunity to participate in revival of RoA at 0.8-0.9 per cent with recovery from earlier stressed exposure being a re-rating catalyst.