Jefferies has reiterated its Buy rating on Punjab National Bank (PNB) with a target price of ₹135, reflecting a potential upside of 36% from the current market price of ₹98.97. PNB reported a Q2 profit of ₹43 billion, marking a 145% year-over-year increase, driven by higher other income and lower credit costs, which offset increased staff costs due to AS-15 adjustments.
A key positive for the quarter was the bank’s reduced slippage rate at 1%, along with solid recoveries. With a coverage ratio at 90%, Jefferies expects credit costs to remain low over the next 1-2 years. The firm projects a return on assets (ROA) of 0.9% for FY26, with a potential reduction in tax rates further boosting ROA. The valuation at 1x adjusted price-to-book for FY25E is considered attractive by Jefferies.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors are advised to perform their due diligence before making investment decisions.
