Neutral on Punjab National Bank, target price Rs 45: Motilal Oswal

Motilal Oswal has neutral call on Punjab National Bank with a target price of Rs 45. The current market price of Punjab National Bank is Rs 40.3. Time period given by analyst is one year when Punjab National Bank price can reach defined target.

Punjab National Bank, incorporated in the year 1969, is a banking company (having a market cap of Rs 44374.39 Crore).

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 22815.41 Crore, up .16 % from last quarter Total Income of Rs 22779.56 Crore and down -7.73 % from last year same quarter Total Income of Rs 24727.72 Crore. The bank reported net profit after tax of Rs 1168.33 Crore in latest quarter.


Investment Rationale
PNB reported a healthy performance, supported by a pick-up in NII, higher other income, and lower opex, even as provisions stood stable QoQ. Business growth remains muted, however margin witnessed a sequential uptick. The bank expects growth to pick up, led by RAM segments, while the Corporate book too would undergo a gradual recovery. Asset quality was largely stable, despite higher slippages, supported by recoveries and upgrades. SMA 1 and 2 book stands elevated at 3.9% of loans, while restructured book, at 2.02% of loans (expect a further restructuring of INR15-20b), keeps the brokerage watchful over the near term. It estimates a RoA/RoE of 0.6%/8.8% by FY23E.

Promoter/FII Holdings
Promoters held 32.6 per cent stake in the company as of June 30, 2021, while FIIs held 25.9 per cent, DIIs 3 per cent and public and others 38.6 per cent.