Punjab National Bank (PNB) has been consistently delivering strong earnings, and analysts believe that the bank's wholesale book has undergone significant improvements, with further recoveries expected in FY24. Several brokerages are projecting a surge of up to 470% in year-on-year profit growth for the March quarter.
Despite trading flat at Rs 60.45 on BSE, PNB's stock has witnessed a 17% increase in the last month and an impressive 95% rise in the past year.
LKP Securities expressed confidence in PNB's loan book, anticipating cautious growth at a compounded annual growth rate (CAGR) of 11-12% over FY23-25E, driven by the growth of the retail book. They also believe that the bank's credit cost will normalize further by FY24E, projecting a return ratio of 0.5% for ROA and 7.8% for ROE in FY25E. LKP Securities valued the standalone entity at 0.7 times FY23E BVPS of Rs 105 and estimated the value of associates and subsidiaries at Rs 7, resulting in a target price of Rs 80.
Additionally, LKP Securities pointed out that Punjab National Bank (PNB) experienced strong growth in its lending activities during FY23, and this positive trend is anticipated to persist throughout FY24. They also mentioned that the bank's net interest margin (NIM) will remain intact as the MCLR book is currently undergoing re-pricing, accounting for 35% of the bank's portfolio.
In terms of Q1 results, Sharekhan predicts a staggering 469.80% YoY rise in net profit to Rs 1,755 crore, accompanied by a 27.90% YoY increase in net interest income (NII) to Rs 9,650 crore. Sharekhan sets a target of Rs 64 for PNB, expecting advances growth to outpace the industry.
Elara Securities forecasts a profit of Rs 1,007.40 crore, indicating a YoY growth of 226.60%. Their target for the stock is set at Rs 53. On the other hand, Motilal Oswal projects a profit of Rs 1,486.20 crore, reflecting a significant 381.80% increase. They highlight the reduction in net NPA and the recovery of return on assets (RoA) as key factors to monitor, with a gross NPA expectation of 8.3% compared to 8.7% QoQ.
Please note that the views & projections expressed in the above article are based on expert opinions and should be verified independently.