PNB share price targets: Should you buy, hold or sell this PSU banking stock?

Punjab National Bank (PNB) reported a 13 per cent year-on-year (Y-o-Y) rise in net profit at Rs 5,100 crore for the December quarter, beating Motilal Oswal Financial Services (MOFSL) estimates by 7 per cent. The profit growth was aided by higher other income, partly offset by higher-than-expected provisions. Net interest income (NII) declined 4.5 per cent YoY to Rs 10,533 crore, missing MOFSL estimates by 3 per cent.

PNB’s December quarter performance also came in below Nirmal Bang Institutional Equities’ estimates at the net interest income and pre-provision operating profit levels by 12.3 per cent and 4.5 per cent, respectively. Profit after tax, however, was 6.8 per cent higher than Nirmal Bang’s expectations.

PNB Q3 NIM drops

For the quarter, PNB's net interest margin (NIM) fell 8 basis points sequentially to 2.52 per cent. This contraction in NIM was primarily led by a fall in yield on advances (down 21 bps QoQ to 7.69 per cent) as well as yields on investment (down 17 bps QoQ to 6.76 per cent).

"PNB reported a modest quarter. The bank made floating provisions amounting to Rs 960 crore, prudently utilising the stake sale gains from its stake in Canara HSBC Life. The estimated ECL transition impact is pegged at Rs 9,000–10,000 crore, against which the bank currently holds a floating provision buffer of Rs 1,780 crore," MOFSL said.

MOFSL said while the overall business growth remained healthy, relatively faster growth in corporate and international advances contributed to margin pressure. 

PNB target prices

Antique Stock Broking has revised its target on PNB to Rs 140 from Rs 135 earlier. In its target, Antique has factored in the impact of the recent December 2025 repo cut of 25 bps in the EBLR book. Along with that, it also assumed 70 per cent transmission of policy repo rate cut of 125 bps via the MCLR book by FY27 end. It also factored in the benefit of peak TD rate cuts taken in June, August, and December 2025.

"This leads to a cut in our FY26/ 27/ 28 EPS estimates by 4 per cent, 4 per cent and 12 per cent. We rollover to FY28 and value the bank at FY28 P/B of 0.97 times leading," it said. 

MOFSL said PNB's asset quality has improved, with controlled slippages, while recoveries continued at a healthy pace.

"We trim our earnings estimates by 3 per cent/4 per cent for FY27/FY28 and estimate FY27 RoA/RoE at 1.02 per cent/15.1 per cent. We reiterate our Buy rating with a target price of Rs 145 (premised on 1.0x Sep’27E ABV)," MOFSL said.

The target price suggests a 14 per cent potential upside on the counter. 

"We have valued PNB at 0.9 times December 2027E ABV (same as earlier) and derived a target price (TP) of Rs129 (as against Rs 127 earlier). Our target multiple is at a 21.1 per cent premium to the past 5-year average multiple of 0.74 times. We expect RoA to average at 0.9 per cent over FY25-FY28E due to compression in margins in FY26E and credit costs normalising upwards to 35-60 bps (from 20 bps in FY25). We thus maintain a ‘Hold’ rating on PNB," Nirmal Bang said.

PNB expects global NIM to be 2.6 per cent, while sees domestic NIM at 2.7 per cent. Credit growth guidance has been maintained at 11-12 per cent.