PNB Share Price Target 2024 (Image Source: iStockphoto)
On Thursday, the shares of Punjab National Bank closed at Rs 121.25, 3.94 per cent up from the previous day’s closing. The 52 week high and low of the share is Rs 132.95 and Rs 44.40 respectively.
According to the BSE analytics, the shares have massive returns of 34.75 per cent in the last 3 months, 61.40 per cent in the last 6 months and 153.14 per cent in the last 1 year.
According to the Sharekhan by BNP Paribas report, PNB’s return ratios have remained subdued compared to its peers due to elevated provisions and operational costs, but prospects for improvement are on the horizon. Previously, higher credit costs were driven by a larger net NPA book.
However, a decreasing trend in slippages, robust recoveries and upgrades, and a net NPA ratio below 1% are expected to facilitate a quicker normalization of credit costs moving forward. Additionally, reduced provisions for retirement-related expenses and wage settlements are anticipated to alleviate cost pressures.
The report added that the bank aims for a loan growth of approximately 12-14 per cent in the future, leveraging its excess liquidity position and credit-deposit ratio of around 69 per cent, along with an LCR of 140-150 per cent. This advantageous liquidity profile positions PNB favorably to expand its loan book without being hindered by deposit growth challenges. Strong pre-provision operating profit growth, coupled with normalized credit costs, is anticipated to drive significant enhancements in return ratios by FY25E, with projected RoA/RoE figures of 0.9-1.0 per cent and 12-13 per cent, respectively.
The bank foresees no further increase in deposit rates, yet anticipates prolonged elevation in rates. PNB’s higher CASA ratio compared to its PSU bank counterparts is expected to partially mitigate NIM pressures. Furthermore, a reduction in operating expenses is projected, primarily driven by decreased provisions for pension-related expenses and wage settlements.
Credit growth is anticipated to align with deposit growth in the industry by FY25E, with public banks like PNB expected to sustain a 12-14% loan growth trajectory. Despite the challenging deposit growth environment, PNB’s lower credit-deposit ratio and ample liquidity position it well for continued loan expansion, particularly in the retail, agricultural, and MSME segments.
Asset quality remains stable, supported by declining gross slippages and healthy recoveries. PNB’s prudent underwriting practices post-COVID are expected to sustain lower slippage trends, narrowing the gap in underwriting quality with peers.
PNB Share Price Target
The report has given a Buy rating on PNB, with a revised price target of Rs. 140, reflecting expectations of improved return ratios and favorable valuation metrics. Meanwhile, the key risks include economic slowdown, higher-than-expected credit costs, and lower-than-anticipated margins.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. TN NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
