PNB
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+0.25 (+0.48%)
NSE Volume
79.4L+
Broker Reports
ACCUMULATE
ACCUMULATE
ACCUMULATE
ACCUMULATE
HOLD
REDUCE
PNB operating performance was slightly better on back of stable NIMs of 2.4%, support from treasury and surprisingly lower opex (we estimated higher on likely actuary adjustment on retirement benefits). Bank also will opt the new tax rate only in FY21 post assessing the DTA & MAT availability post- merger which led to positive PAT. Slippages came in high leading to asset quality deterioration and increase in provision which was also on back ofdeferred fraud provision from Bhushan Power NPA. Bank’s CET-I has reached 10.9% post the Govt. infusion of Rs160bn which should also take care for merger outcomes going ahead, hence the large dilution below book leads us to keep our REDUCE rating with revised TP of Rs57 (from Rs51) based 0.8x Sep-FY22 ABV.
BUY
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.
BUY
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.
ACCUMULATE
Non-Core Divestures, Recoveries To Address Capital Constraints And Growth. Punjab National Bank (PNB) reported 4QFY19 results with the key pointers being (1) Higher than expected loss worsens capital positioning; non-core asset divestures and recoveries to help in garnering capital and address growth. (2) Excluding IL&FS and slippages from existing NPA accounts, fresh slippages were mostly from medium sized accounts; FY20 recoveries to be similar as FY19 (a) RWA density indicates improvement in RWA profile and optimal capital utilization. (See comprehensive analyst meet takeaways on page 2 for significant incremental colour) Per se, on the key P&L items, PNB posted NII growth of 37% YoY at Rs42,003mn, PPOP was back in the black at Rs28,612mn and a loss of Rs47,496mn versus a loss of Rs134,169mn in the corresponding quarter last year. We have revised our estimates for FY20/FY21 and retained Accumulate rating on PNB, revising our target price to Rs92 (from Rs95 earlier), valuing the stock at 0.8x standalone FY21E P/ABV and ascribing a value of Rs26 for subsidiaries.
REDUCE
Higher provisions though led to improved PCR +750bps QoQ to 61.7% (excl. technical w.off) but coverage continues to remain lower than that of large peer banks. Operating profit remains volatile with issue lingering in asset quality but core asset sale can aid to earnings/provisions and improve capital position which is critical. We downgrade to REDUCE from HOLD with revised TP of Rs75 (from Rs98) based 1.0x FY21 ABV.
BUY
PNB trades at reasonable valuations of <1x its FY2021E book value, as valuations reflect market concerns over growth and assetperformance. We introduce our estimates for FY2021E and rollover the price target (PT). We believe the asset quality and, therefore, the earnings outlook have improved for the bank. Hence, we maintain our Buy rating on the stock with a revised PT of Rs. 110.
NEUTRAL
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ACCUMULATE
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ACCUMULATE
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SELL
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About
Punjab National Bank
NSE: PNB | BSE: 532461 | ISIN: INE160A01022 | Sector: Banks
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