PNB shares: PSU bank stock a buy post Q4 results? Here are target prices

Punjab National Bank (PNB) reported an inline Q4 profit on higher other income, but its net interest income missed (NII) analyst estimates. Provisions came in higher than projections, but the business growth guidance was steady. Stock Analysts are neutral to positive on the stock post the PSU lender's March quarter earnings.

PNB said its profit for the March quarter grew 51.7 per cent YoY to Rs 4,567 crore from Rs 3,010 crore. NII rose to Rs 10,757 crore from Rs 10,363 crore YoY. Net Interest Margin (NIM) came in at 2.81 per cent against 2.93 per cent in Q3 and 3.10 per cent in the year-ago quarter .

Nirmal Bang said PNB's Q4 profit was supported by robust growth in other income, advances and deposits. NIMs declined, owing to a fall in yield on advances by 2 bps to 8.36 per cent in Q4 from 8.38 per cent in Q3. Also there was 13 basis points rise in cost of funds sequentially to 4.76 per cent from 4.63 per cent in Q3. 

That said advances and deposits grew by 13.6 per cent YoY and 14.4 per cent YoY, respectively, better than industry growth of 11 per cent YoY and 10.3 per cent YoY respectively, Nirmal Bang said. Asset quality continued to improve. 

MOFSL said PNB reported a moderate quarter, characterised by NII miss due to NIM decline and higher provisions, while other income was healthy. 

"NII declined as NIMs contracted due to cost pressures. Business growth was moderate in 4Q; however, the bank outperformed its business growth guidance for FY25. 4Q saw a spike in slippages amid an increase in agri and MSME slippages, while asset quality ratios improved, led by better recoveries and write-off. We largely maintain our EPS estimates," MOFSL said. 

This brokerage reiterated its 'Buy' rating on the stock with a target of Rs 125. Nirmal Bang suggested a target of Rs 102 from Rs 101 earlier. Its target multiple is at a 20.5 per cent premium to the past 5-year average multiple of 0.66x. 

CLSA suggested 'Accumulate' on the PSU bank as it raised its target price to Rs 120 from Rs 80 earlier.