PNB is one of the oldest banks in India that caters to a number of financial requirements throughout the country and is a well reputed bank. Being one of the most widespread banking facilities in urban and rural regions, PNB covers almost all the essential services among which it is possible to identify the corporate and personal banking, industrial and agricultural financing and international banking.
Low cost deposit mobilization and better lending solutions to agriculture, and small and medium enterprises (SMEs) remains the focus of the bank. Moreover, in operation and management PNB targets on enhancing the strategic positioning of subsidiaries and joint ventures for growth and sustenance.
As of the latest trading session, PNB is valued at Rs 98.64, an increase of Rs 2.92 or 3.05%. The market capitalisation is Rs 1.145 trillion which suggests its position in the financial market sector. The beta of the bank is at 0.83 hence showing less volatility than the market.
Analysts have set target estimates of one-year on the shares of the bank at Rs 102.73.
As it stands, PNB has declared on 28th of October that it has a net profit of Rs 4,303.5 crore in the Q2 ended September 2024. This is with a standalone net profit soaring by 145% year-on-year to Rs 4,303.5 crore, up from Rs 1,756 crore in the same quarter last year.
This substantial increase in net profit was mainly due to cut down on new provisions and other legal contingencies which came down to Rs 288.01 crore from Rs 3,444.18 crore YoY.
To this point, if we check on the net interest income (NII), they have it that it has a 6% increase. It was due to this that it was able to achieve a figure of Rs 10,517 crore in the fiscal as against Rs 9,923 crore recorded in the previous year. Its pre-provision operating profit was also up by 10.24% at Rs 6,853.31 crore from Rs 6,216.43 crore YoY.
Asset quality improved greatly, as the Gross Non Performing Asset (GNPA) came down to Rs 47,582.25 crore from Rs 51,262.75 crore in the prior quarter. The Gross NPA ratio decreased to 4.48% from 4.98%, indicating better asset quality. Net NPA fell to Rs 4,674.24 crore, resulting in a Net NPA ratio of 0.46%, down from 0.60% QoQ.
PNB also recorded an increase in deposit and advance. Savings Deposits has increased at the rate of 3.7% to Rs 4,88,635 crore and Current Deposits at the rate of 1.6% to Rs 68,104 crore during the year. The CASA Deposits increased by 3.4 % and the CASA Share was 39.31% as on 30 th September 2024. Credit to the retail sector was up by 14.6% YoY to Rs 2,50,149 crore with participation by the core retail credit up by 19.0%.
Following the announcement of these impressive results, PNB’s share price jumped over 5%, reclaiming the Rs 100 mark and trading at Rs 100.95 on the BSE by 2:10 PM showing investors’ expectations of better performance by the bank.
As of September 30th 2024, PNB operated 10,159 domestic branches and 2 international branches, with 63.31% of its branches located in rural and semi-urban areas.
PNB is valued with a market capitalization of Rs 1.10 trillion. The trailing price-to-earnings (P/E) ratio stands at 8.98, indicating that investors are willing to pay Rs 8.98 for every Rs 1 of earnings.
The bank's price-to-sales (P/S) ratio is reported at 1.87, while the price-to-book (P/B) ratio is 0.94, suggesting that the stock is trading slightly below its book value. The enterprise value to revenue ratio is 3.24, providing insight into the company’s valuation in relation to its sales.
PNB demonstrates strong profitability, with a profit margin of 28.33%. The bank generated total revenue of Rs 414.45 billion over the trailing twelve months (ttm), leading to a net income available to common shareholders of Rs 117.41 billion. The diluted earnings per share (EPS) for the bank stands at Rs 10.66.
As of the most recent quarter, PNB reported total cash holdings of Rs 696.28 billion, reflecting a solid cash position to support ongoing operations and growth initiatives. While the return on assets and return on equity metrics are currently unavailable, the bank's overall financial performance indicates a robust operational foundation.
The performance of PNB in recent years has shown significant growth, especially when analyzed against the S&P BSE SENSEX benchmark.
Year-to-Date (YTD) Return: PNB.NS delivered a YTD return of +4.24%, while the S&P BSE SENSEX outperformed it with a +10.75% gain. This indicates that while PNB.NS has seen positive growth this year, the broader market has performed better.
1-Year Return: Over the past year, PNB.NS has shown robust performance with a +36.44% return, significantly exceeding the S&P BSE SENSEX's +25.43% return. This suggests that PNB.NS has been a strong performer in the short term, with returns well above the market average.
3-Year Return: Over a three-year horizon, PNB.NS has achieved a substantial return of +123.15%, which is considerably higher than the S&P BSE SENSEX’s +30.85%. This indicates that PNB.NS has shown strong growth and resilience over multiple years, outpacing the index by a significant margin.
This performance data highlights that PNB.NS has been a competitive investment, particularly in the 1-year and 3-year ranges, where it has substantially outperformed the broader market index.
The company has struggled with earnings over the past quarters, as shown by the repeated earnings misses. In Q3 2023, Q4 2023, and Q1 2024, PNB.NS reported actual EPS of -0.31, -0.35, and -0.84, respectively, all below analyst expectations.
For Q2 2024, PNB.NS is estimated to achieve an EPS of +3.19, which, if achieved, would mark a significant recovery. This estimate reflects market optimism for a rebound in PNB.NS's profitability.
PNB has been in a downtrend since reaching a peak of 142.90 at the end of April, with prices currently testing a critical support level around the 90s. This support level is crucial; if it holds, there is potential for an upward movement, which could lead to a breakout above a descending trendline.
However, if the price fails to find support here, it may drop further, potentially reaching the next support level near 83 before attempting to recover.
The recent favorable earnings report increases the likelihood of a rebound from the current level, with a 1-year target estimate set at 102.73, suggesting possible upside potential if conditions improve.
PNB has demonstrated resilience and growth potential across multiple financial and operational metrics. Despite recent challenges with earnings volatility, the bank's improved asset quality, robust revenue growth, and significant reduction in non-performing assets underscore its commitment to strengthening its financial position. With favorable Q2 results, the stock appears poised for potential recovery, especially if it holds key technical support levels.
The analysis indicates PNB’s substantial value proposition for investors, particularly in the banking sector, with a promising outlook for future growth driven by strategic repositioning, a stable deposit base, and increased profitability. While short-term challenges remain, PNB’s consistent performance against market benchmarks suggests its long-term potential as a competitive investment.