PUNJAB NATIONAL BANK

COMPANY PROFILE

Punjab National Bank was set up in 1895 and is a Governe- ment of India undertaking and provides banking and other financial services primarily to retail and corporate clients in India. Punjab National Bank (PNB) is the third largest bank in India in terms of asset size and is currently the second largest state-owned com- mercial bank in India.

For FY 2014, PNB’s net interest margins stood at 3.44 % (3.52 % for FY 2013). Total deposits with the bank stood at Rs. 4,51,397 Cr. growing by 15.30 % over the previous year. For the same period, net NPA’s stood at 2.85% (2.35% for FY 2013).

As of March 31, 2014, PNB’s customer base was over 82 mil- lion and its distribution network was at 6,200 branches and 6,940 ATMs. Bank has overseas footprints in 10 countries with 4 overseas branches and an offshore banking unit in Mumbai; wholly owned subsidiary in UK with 7 branches; a subsidiary each in Kazakhstan & Bhutan; 5 Representative offices in Australia, Norway, Dubai, China and Kazakhstan; and 1 joint venture with Everest Bank Ltd., Nepal.

STOCK INFORMATION

STOCK PRICE

1121.00

TARGET PRICE

1160-1200

SECTOR

BANK

SYMBOL (AT NSE)

PNB

ISIN

INE160A01014

FACE VALUE (IN RS.)

10.00

BSE CODE

532461

STOCK FUNDAMENTALS

MARKET CAP

40,588.04

BOOK VALUE

991.39

EPS - (TTM) (IN RS. CR.)

97.83

P/E

11.46

INDUSTRY P/E

12.55

INVESTMENT RATIONALE

PNB’s Q2FY15 PAT at Rs 5.8bn came in sharply below esti- mates due to a 24bps decline in NIMs, higher staff expenses and provisions, but partly supported by greater other in- come. Asset quality deteriorated significantly with slippages/ restructuring remaining high at Rs 39.7bn/Rs 32.9bn (5.1%/ 4.2%). While the bank’s performance remains volatile, we are positive on the stock given a decent CETI of 8.4%, a healthy domestic CASA ratio of 40%, and reasonable valua- tions of 1.0x FY16E ABV "With a calibrated approach to growth, PNB is well-placed among PSU banks to benefit from an economic recovery, which in turn should translate into lower credit costs for the bank. We remain positive on the stock given Punjab National Bank (PNB’s) comfortable capital position, a healthy domestic CASA ratio, and reasonable valuations.

SHAREHOLDING PATTERN

Punjab National Bank Shareholding Pattern

 

OUTLOOK AND VALUATION

Net stress additions increased significantly QoQ. However, loan portfolio is highly levered to resolution of policy bottle- necks and improvement in economic growth. We have cut the PAT estimates by 20%+ to factor higher credit costs and weak margins. Despite factoring a high credit cost of 1.6% and 36% tax rate, FY15E PAT is expected to grow 27% YoY. Focus on profitable growth, healthy core NIM, CET1 of ~8.4% are certain positives for PNB. Maintain Buy.

RESULTS (Quarterly )(Rs CR.)

                                                                                                                      

SEP' 14

JUN' 14

MAR' 14

DEC' 13

SEP' 13

Sales

11,462.09

11,588.69

11,101.33

10,983.87

10,733.51

Operat- ing profit

6,860.62

8,170.24

6,737.37

6,936.66

6,454.75

Interest

7,310.89

7,208.99

7,099.53

6,762.75

6,717.97

Gross profit

2,876.03

3,125.30

3,173.43

2,702.38

2,534.84

EPS (Rs)

15.89

38.81

22.27

20.86

14.30

 
TECHNICAL VIEW

Punjab National Bank Technical View

 

Punjab National Bank (PNB) is looking strong on charts. We advise to buy around 1100-1125 with stoploss of 1060 for the targets of 1160-1200 levels. RSI is also showing upside momentum in it

SYMBOL

VALUE

ACTION

RSI(14)

65.445

BUY

STOCH(9,6)

69.874

BUY

STOCHRSI(14)

84.491

OVERBOUGHT

MACD(12,26)

-31.090

SELL

ADX(14)

24.654

BUY

WILLIAMS %R

-14.007

OVERBOUGHT

CCI(14)

119.0442

BUY

ATR(14)

8.4143

LESS VOLATILITY

HIGH/LOWS(14)

15.6071

BUY

ULTIMATE OSCILLATOR

58.606

BUY

ROC

3.553

BUY

BULL/BEAR POWER()13

22.7060

BUY

BUY: 08 SELL:1 NEUTRAL: 2

SUMMARY : STRONG BUY

Our Other Recommendation for Next Week

SCRIP

ACTION

CMP

ENTRY

SL

TGT

TIME FRAME

ITC

BUY

391.35

388-392

383

398-408

ONE WEEK

AMBUJA CEM

BUY

236.95

232-236

227

242-248

ONE WEEK

DLF

BUY

161.70

160-162

156

166-170

ONE WEEK

RELCAP

SELL

518.90

520-525

540

510-490

ONE WEEK

RADICO KHITAN

BUY

99.00

97-100

92

105-110

ONE WEEK

Performance of Previous Week

SCRIP

LOT

ACTION

ENTRY

SL

TGT

P&L

REMARK

CLOSE / LOW/HIGH

BPCL

500

BUY

750-760

730

775-785

-10000.00

SL TRG

714.90 / 764.75

IDEA

2000

SELL

160-162

165

155-150

10000.00

FIRST TGT HIT

153.80 / 152.25

PFC

1000

BUY

308-312

302

318-324

-6000.00

SL TRG

306.00 / 297.60

BANK OF INDIA

1000

BUY

285-290

278

296-304

19000.00

BOTH TGT HIT

300.65 / 307.40

UCO BANK

4000

BUY

87-89

85

92-95

16000.00

NEAR TGT

88.60 / 91.10

BANK BARODA

250

BUY

1080-1100

1060

1120-1140

10000.00

FIRST TGT HIT

1113.30 / 1128.50

NET PROFIT

 

 

 

 

 

39000.00

 

 

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DISCLAIMER

This report is only for the information of our customers. Recommendations, opinions, or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. ATS and/or its group companies do not as assume any responsibility or liability resulting from the use of such information.

 

 

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