Punjab National Bank (PNB) share price jumps despite dip in Q3 net profit. Buy or sell?

According to stock market experts, PNB net profit declined due to high provisioning. The banking stock is still at attractive valuations in comparison to its peers State Bank of India (SBI) and Bank of Baroda (BoB). They said that PNB share price has rebounded from its previous low of ₹49 apiece and it may go up to ₹59 apiece levels in near term. On breakage of this hurdle, the stock may go up to ₹64 and ₹70 levels in medium to long term.

Speaking on PNB share price outlook, Vinit Bolinjkar, Head of Research at Ventura Securities said, “PNB share price is currently trading at 0.57X FY25 P/BV, which is significantly lower than peers – SBI (FY25 P/BV of 1.2X) and BoB (FY25 P/BV of 0.7X). We estimate earnings to remain under pressure in the next 9-12 months as the company catches up on back-book provisioning. However, with limited new stress formation and lending growth itself picking up, we see the further scope of re-rating at PNB.”

On why PNB share price is rising despite dip in net profit of the bank, Ventura expert said, “Despite strong topline growth, the bottom line was dragged down by a 40% YoY rise in provisions (to ₹4,713 cr). Despite the rise in provisions, the bank’s NPAs declined – GNPA were at 9.76% (down from 12.88% in Q3FY22) and NNPA were at 3.30% (down from 4.90% in Q3FY22). Fresh slippages rose marginally to ₹3,865 crore from ₹3,831 crore a year ago.”

Asked about the pivot levels in regard to Punjab National Bank shares, Vaishali Parekh, Vice President — Technical Research at Prabhudas Lilladher said, “PNB stock has witnessed a correction from ₹59 zone and has reached the previous low of ₹49 levels showing signs of bottoming out from the zone. Further the stock has the major support zone of ₹47 to ₹45 band, which would be considered as the crucial levels below which trend can turn very bearish. With the pullback visible, the near term targets would be once again the previous high of ₹59 zone and further breakout would open the gates for ₹64 and ₹70 levels.”

PNB Q3 results 2023

PNB’s net interest income (NII) grew 17.6% YoY to ₹9,179 crore, while its Non-interest income grew by 23.6% to ₹3,338 crore. NII growth was driven by a healthy 11.8% domestic loan growth and a sequential surge in net interest margin (NIM) to 3.30%. PNB was able to pass on policy rate hikes through increases in loan rates, thereby offsetting some of the increase in its cost of deposits.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.