Sell Punjab National Bank, target price Rs 29: Emkay Global

Emkay Global has given a sell rating to PNB with a target price of Rs 29. The share price moved up by 0 per cent from its previous close of Rs 35.30. The stock’s last traded price is Rs 35.30.

Punjab National Bank, incorporated in the year 1969, is a banking company (having a market cap of Rs 33125.42 Crore).

Financials
For the quarter ended 30-06-2020, the company reported a Consolidated Interest Income of Rs 13924.49 Crore, up 49.20 % from last quarter Interest Income of Rs 9333.00 Crore and up 55.59 % from last year same quarter Interest Income of Rs 8949.73 Crore. The bank reported net profit after tax of Rs 475.19 Crore in latest quarter.

PNB-graph

Investment Rationale
The brokerage believes that subdued credit growth, low fees and elevated credit cost to keep RoAs in the negative zone for FY21E (first year post merger), but to gradually recover to 10/20bps in FY22/23E. It has retained Sell/UW in EAP, with a TP of Rs29 (valuing core bank at 0.5x FY22ABV + Subs value of Rs 4 per share). Key risks to call: Better-thanexpected experience on NPA formation and lumpy one-off gains from PNB Housing/insurance subsidiaries (PNB MetLife/Canara HSBC Life).

Promoter/FII Holdings
Promoters held 85.6 per cent stake in the company as of June 30, 2020, while FIIs held 1 per cent, DIIs 6.8 per cent and public and others 6.6 per cent.