PNB share price target at Rs 135: Why MOFSL has 'Buy' rating on PSU bank stock
PSU bank stock: MOFSL has tweaked its earnings estimates and now expect RoA and RoE at 1.03 per cent and 15.4 per cent, respectively, in FY27. It suggested a target price of Rs 135 on the stock.
- Oct 20, 2025,
- Updated Oct 20, 2025 8:17 AM IST
MOFSL has maintained its 'Buy' rating on Punjab National Bank (PNB) following the PSU bank's in-line quarter, saying the lower opex was offset by lower other income and higher provisions. MOFSL said the bank's net interest margin (NIM) contracted 10 basis points sequentially, but the lender expects an improvement from the December quarter onwards.
PNB's business growth remained robust, with management guiding for 11–12 per cent growth in FY26. Asset quality continued to improve, with the annualised slippage ratio steady at 0.7 per cent, below the bank’s guidance of 1 per cent. The SMA-2 book (for loans above Rs 5 crore) also remained stable at 0.17 per cent of domestic loans.
MOFSL has tweaked its earnings estimates and now expect RoA and RoE at 1.03 per cent and 15.4 per cent, respectively, in FY27. It suggested a target price of Rs 135 on the stock.
"PNB reported Q2FY26 PAT of Rs 404 crore amid lower-than-expected opex, partly offset by lower other income and higher-than-expected provisions. NII remained broadly flat YoY (inline), while NIMs contracted 10bp QoQ to 2.6 per cent. Other income declined 5 per cent YoY (11 per cent miss). Total revenue, thus, declined 2 per cent YoY (4 per cent miss)," MOFSL said.
PNB's loan book grew 11 per cent YoY (4 per cent QoQ), while deposits grew 11 per cent YoY (2 per cent QoQ). As a result, the CD ratio increased to 70.1 per cent.
Under the ECL draft framework, Stage-1 carries the same provision as a standard asset. Stage 3 poses no challenge, as the bank has a PCR of 96 per cent. Stage 2 is expected to have some impact, translating to 75-80 bps effect on CRAR. Other provision has seen some increase as there was an ILFS account that has seen reduction from NPA provision and moved to the other provision account. This account will see a reversal in Q3 and Q4, MOFSL said.
MOFSL noted that ROA was muted. The DTA calculation reversal is expected, and there is a gap of 10 per cent. Since the bank has moved to the new tax regime, the RoA will be on the better side of 1 per cent and above. Treasury profits, MOFSL noted, were maintained in Q1 and Q2. "3Q will depend on the bonds movement. The bank will be receiving a Rs 1500 crore of treasury profit every quarter going ahead," it said.
MOFSL has maintained its 'Buy' rating on Punjab National Bank (PNB) following the PSU bank's in-line quarter, saying the lower opex was offset by lower other income and higher provisions. MOFSL said the bank's net interest margin (NIM) contracted 10 basis points sequentially, but the lender expects an improvement from the December quarter onwards.
PNB's business growth remained robust, with management guiding for 11–12 per cent growth in FY26. Asset quality continued to improve, with the annualised slippage ratio steady at 0.7 per cent, below the bank’s guidance of 1 per cent. The SMA-2 book (for loans above Rs 5 crore) also remained stable at 0.17 per cent of domestic loans.
MOFSL has tweaked its earnings estimates and now expect RoA and RoE at 1.03 per cent and 15.4 per cent, respectively, in FY27. It suggested a target price of Rs 135 on the stock.
"PNB reported Q2FY26 PAT of Rs 404 crore amid lower-than-expected opex, partly offset by lower other income and higher-than-expected provisions. NII remained broadly flat YoY (inline), while NIMs contracted 10bp QoQ to 2.6 per cent. Other income declined 5 per cent YoY (11 per cent miss). Total revenue, thus, declined 2 per cent YoY (4 per cent miss)," MOFSL said.
PNB's loan book grew 11 per cent YoY (4 per cent QoQ), while deposits grew 11 per cent YoY (2 per cent QoQ). As a result, the CD ratio increased to 70.1 per cent.
Under the ECL draft framework, Stage-1 carries the same provision as a standard asset. Stage 3 poses no challenge, as the bank has a PCR of 96 per cent. Stage 2 is expected to have some impact, translating to 75-80 bps effect on CRAR. Other provision has seen some increase as there was an ILFS account that has seen reduction from NPA provision and moved to the other provision account. This account will see a reversal in Q3 and Q4, MOFSL said.
MOFSL noted that ROA was muted. The DTA calculation reversal is expected, and there is a gap of 10 per cent. Since the bank has moved to the new tax regime, the RoA will be on the better side of 1 per cent and above. Treasury profits, MOFSL noted, were maintained in Q1 and Q2. "3Q will depend on the bonds movement. The bank will be receiving a Rs 1500 crore of treasury profit every quarter going ahead," it said.