Citi has reiterated its sell rating on Punjab National Bank with a target price of ₹115 per share, citing pressure on net interest margins and a more cautious profitability outlook.
The brokerage noted that NIMs came in below expectations, prompting management to cut FY26 margin guidance to 2.6%. Citi believes this reflects ongoing challenges in sustaining spreads amid competitive deposit pricing and asset mix pressures.
While headline return on assets remains supported, Citi highlighted that RoA was aided by treasury gains and recoveries, rather than core operating improvement. Credit costs for the quarter stood at 39 basis points, largely due to floating provisions, which helped cushion reported earnings.
Management has expressed confidence in delivering 1% RoA in FY26, but Citi remains cautious on the quality and sustainability of this improvement. The brokerage believes margin pressure, combined with reliance on non-core income levers, could weigh on earnings consistency.
Given these factors, Citi continues to see limited upside potential in the stock at current levels and maintains its sell stance.
Disclaimer: The views and recommendations above are those of Citi. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
