The Punjab National Bank (PNB) shares climbed around 4% in early trade on May 6 when the lender reported its Q4FY26 earnings. The stock opened at Rs. 110.05 compared to its previous close at Rs. 107.90; this reflects a positive investor outlook.
PNB has reported a year-on-year (YoY) increase of 14.41% in standalone net profit to Rs. 5,225.11 crore as compared to Rs. 4,567 crore in the same quarter last year. Operating profit also increased 10.7% YoY to Rs. 7,500 crore, driven by reduced credit costs and controlled operating expenses.
However, Net interest margins (NIMs) declined as the net interest income (NII) fell 3.5% YoY to Rs. 10,380 crore. Domestic NIM stood at 2.61% versus 2.96% YoY, and global NIM dropped to 2.47% from 2.81%. Analysts are also concerned about the margin compression of the bank in the core earnings.
Despite the mixed performance, most of the brokerages have maintained a positive view on the stock. The quarter showed a mixed performance according to Motilal Oswal Financial Services; profit growth was fueled by reduced provisions and expenses.
“The bank guided for RoA of more than 1% for FY27, while credit cost is guided at less than 0.4%. We estimate FY27 RoA and RoE at nearly 1% and 14.8%, respectively,” the brokerage said. It maintained a ‘buy’ rating with a target price of Rs. 135, implying nearly 25% upside.
Similarly, CLSA reiterated an ‘outperform’ rating with a target price of Rs. 135, noting that the company made a 16% profit that exceeded the expectation amid lower-than-expected costs. It, however, noted weaker NII and slower deposit growth as an issue.
Jefferies also maintained a ‘buy’ call with a Rs. 130 target, highlighting that loan growth improved to around 14% YoY, although margin pressure impacted earnings.
On the other hand, Elara Securities adopted a more cautious stance, retaining an ‘accumulate’ rating and lowered its target price to Rs. 125. The brokerage reported softer Q4FY26 and stressed that the potential for recovery is critical.
Morgan Stanley was also bearish with an ‘underweight’ rating and a target of Rs. 88 on the basis of risks of compression of margins and returns sustainability.
Also Read: IDFC First Bank Q4: Profit at Rs 319 Cr Despite Rs 483 Cr Fraud Hit, Core PAT Jumps 145%
Despite the recent bounce, the shares of PNB have declined over 11% year-on-year. There is a split among analysts, with 11 out of 20 analysts recommending a ‘buy’ rating, four analysts recommending a ‘hold’, and five analysts recommending a ‘sell’.
In the future, the management has projected the growth of the loans to 12-13%in FY27, but execution and margin stability will be key. Although the bullish case of the asset quality improvement and controlled cost may be limited by the sustained pressure on the NIMs, which may inhibit the upside in the near future.