Prime Highlights
- CLSA and Jefferies stayed positive on PNB and see upside potential of up to 25%.
- Morgan Stanley remained bearish, citing concerns despite a strong profit beat.
Key Facts
- Punjab National Bank is one of India’s leading state-run lenders.
- Out of 20 analysts tracking PNB, 11 rate it buy, four hold, and five sell.
Background
Shares of Punjab National Bank Ltd. (PNB) rose as much as 2.5% in early trade in the first week of May after several brokerages kept a positive view on the stock despite the bank reporting a mixed March quarter. Analysts from CLSA and Jefferies maintained bullish ratings and projected upside potential of up to 25%.
CLSA retained its “outperform” call with a target price of ₹135 per share. The brokerage said PNB posted a profit after tax that was 16% above estimates, helped by lower operating expenses and reduced credit costs. However, it noted that net interest income fell 3% sequentially despite growth in advances, which remained the main weak point of the quarter.
The brokerage also said loan growth of 13.7% year-on-year came in slightly below expectations. Deposit growth stood at 9% year-on-year, in line with the previous quarter, but slower than the pace seen in FY25. Due to softer net interest income trends, CLSA reduced its FY27 and FY28 profit estimates by 3%.
Jefferies kept its “buy” rating with a price target of ₹130. It said fourth-quarter profit beat estimates, while loan growth improved to 14% year-on-year. However, pressure on net interest margins affected net interest income. The brokerage added that the bank’s loan-to-deposit ratio still leaves room for loan growth even with slower deposit mobilisation.
Morgan Stanley remained cautious with an “underweight” rating and a target price of ₹88, implying downside from current levels. It said one-time gains, such as reversal of retirement provisions, lower credit costs and bad loan recoveries, supported headline profit.
PNB shares traded at ₹110.45 in morning deals. The stock has fallen 11.3% so far this year.