Shares of Punjab National Bank increase by 7% following Q1 results: Is it better to hold, sell, or buy the stock?

Stock Market Today: Following the announcement of Q1 results over the weekend, the price of Punjab National Bank (PNB) shares increased by more than 7% during Monday's early transactions.

The opening price of Punjab National Bank (PNB) shares was ₹124.86, over 4% higher than the previous Monday closing of ₹119.95 on the NSE. After then, the price of PNB's shares increased further, reaching intraday highs of ₹128.66, or gains of more than 6%.

Raising interest income and cutting bad loans helped Punjab National Bank (PNB) report its highest-ever quarterly standalone profit of ₹3,252 crore. The net profit increased annually by 159%.

Net interest income (NII), which is the difference between interest paid and generated, rose 10.2% to ₹10,476.2 crore in the first quarter of the current fiscal year from ₹9,504.3 crore in the same time the previous year.

In their post-results analysis, Jefferies India Pvt ltd analysts stated that Q1FY25 asset quality remained solid, with a target price of ₹150 for the PNB stock, indicating a 20% upside. Jefferies believes the profits rebound will continue.

Although higher operating expenses (related to PSLCs, or priority sector lending certificates) caused Punjab National Bank's (PNB) net profit for Q1FY25 to slightly below Jefferies projections, these are not expected to happen again. PSLCs are certificates that banks receive in relation to priority sector loans.

According to Jefferies, the biggest advantage was that there were 0.8% fewer slippages, which were counterbalanced by higher recoveries. Furthermore, Jefferies predicts that credit costs will remain low for one to two years, with coverage now at 88%. They predict that ROA (Return on Assets) will be 0.9% in FY26, with a possible tax rate decrease helping ROA. Jefferies' FY25 predictions, which place the valuation at 1.1 times adjusted price to book values, are likewise acceptable. They rank the share price of Punjab National Bank (PNB) as Buy, with a target of Rs 150.

Due to fewer provisions, strong net interest income, and stable margins, Motilal Oswal Financial Services increased its earnings per share expectations for FY25 and FY26 by 5.6% and 0.8%, respectively, following the release of their Q1 results. For FY26, they project returns on equity (RoE) of 14.5% and returns on assets (RoA) of 1.0%. According to MOFSL, the target price for the shares of Punjab National Bank (PNB) is ₹135.

In their post-results analysis on Punjab National Bank (PNB), Kotak Institutional Equities stated that the bank's asset quality is satisfactory and that its net NPL (non-performing loan) ratio of 0.6% is comparable to that of State Bank of India. The ratio of slippage was 0.8%. Recoveries of bad loans held up nicely. Positively, retail and agriculture led the 12% annual growth in the Advances. Nonetheless, they believe the Punjab National Bank Share Price (PNB) is valued excessively; their target price is ₹110.