PNB Shares Hit 52-Week High on Strong Q3 Results and Fundraising Plans

PNB Shares Hit 52-Week High on Strong Q3 Results and Fundraising Plans

VoM News Desk | January 30, 2024 | 06:58 PM IST | Breaking News | Follow on Google News

PNB Shares Hit 52-Week High on Strong Q3 Results and Fundraising Plans

PNB Shares Hit 52-Week High on Strong Q3 Results and Fundraising Plans

Shares of Punjab National Bank (PNB) reached their 52-week high, marking a fourth consecutive session of gains, driven by robust December quarter (Q3FY24) results and a fundraising proposal. Despite the positive momentum, brokerage firm Elara Securities has maintained a ‘sell’ rating on the stock with a target price of ₹80, indicating a potential 28% downside. The decision is based on concerns over the bank’s operating performance and expensive valuations.

Stock Performance and Analyst Ratings

In the last four sessions, PNB shares surged by 12.3%, reaching a year-high of ₹110.95. In January, the stock rose over 14%, extending gains for the third consecutive month. Elara Securities emphasizes the lagging operating performance and expensive valuations as the basis for its ‘sell’ recommendation.

Strong Q3FY24 Results

PNB reported a substantial 253% YoY increase in standalone net profit for Q3FY24, reaching ₹2,223 crore. Net interest income (NII) improved by 12.13% YoY to ₹10,293 crore. Provisions witnessed a significant 41.8% decline to ₹2,739 crore, contributing to the bank’s stellar performance. Asset quality improved, with GNPA and NNPA ratios showing notable declines on a YoY basis.

Fundraising Plan and Future Outlook

PNB’s board approved a plan to raise ₹7,500 crore through Qualified Institutions Placement (QIP)/Follow-on Public Offer (FPO) during 2024-25. While the recent positive developments contributed to the stock’s performance, Elara Securities questions whether there is further room for improvement in core metrics or if these are nearing their peak.

Analyst’s View on PNB’s Performance

Elara Securities notes PNB’s improvement in asset quality but highlights the bank’s lower scores compared to peers. Consistency in core pre-provision operating profit (PPOP) is yet to be established, and profitability remains soft. The brokerage emphasizes the need for monitoring PNB’s performance in the coming quarters, particularly regarding asset quality and recovery trends.

The overall assessment suggests that while PNB has shown improvement, challenges persist, and further advancements may depend on sustained positive factors. Elara Securities acknowledges the recent outperformance of PNB but emphasizes the potential headwinds and the bank’s long road to recovery.

VoM News Desk

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