Jefferies has maintained its buy rating on Punjab National Bank with a target price of ₹150 per share after the bank reported a stronger-than-expected performance in the December quarter.
The brokerage noted that Q3 profit rose 13% year-on-year, coming in above its estimates, supported by improved loan growth and stable asset quality trends. Jefferies highlighted that loan growth momentum picked up during the quarter, while the loan-to-deposit ratio remained comfortable at 72%, providing headroom for further growth without balance sheet stress.
Credit costs remained benign, which continued to support earnings visibility. Jefferies pointed out that the transition to the Expected Credit Loss (ECL) framework is estimated to have an impact of around ₹10,000 crore spread over five years, which the brokerage believes is manageable given PNB’s improving profitability profile and recovery trajectory.
The brokerage added that improving operating metrics, stable funding costs and controlled credit risk position PNB well to sustain earnings momentum in the coming quarters. While public sector banks remain sensitive to macro and policy developments, Jefferies believes PNB’s current trajectory reflects strengthening fundamentals.
As a result, Jefferies continues to see favourable risk-reward at current levels and retains its buy stance on the stock.
Disclaimer: The views and recommendations above are those of Jefferies. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
