PNB is available at reasonable valuations of <1x its FY2021E book value. Even though there are challenges, the overhang of high slippages is diminishing, with a possibility of recovery from NCLT exposures being a positive. However, there is an overhang too of book value dilutive equity infusion. Considering the scenario, we maintain our Buy rating on the stock with an revised price target (PT) of Rs. 85.
We have revised our NII estimates by -3.0%/-5.2%, PPOP estimates by -1.6%/-4.7% and PAT estimates by -4.2%/-7.5% for FY20/FY21, respectively. We have retained Accumulate rating on PNB, revising our target price to Rs73 (from Rs92 earlier), valuing the stock at 0.6x standalone FY21E P/ABV and ascribing a value of Rs22 for subsidiaries.