Punjab National Bank: PAT growth of 196% & Net Interest Income growth of 10% in Q1-25 at a PE of 10
Punjab National Bank: PAT growth of 196% & Net Interest Income growth of 10% in Q1-25 at a PE of 10
Outlook for 50%+ PAT growth in FY25. On track to deliver as per FY25 guidance. Available at a reasonable P/B of 1.5
1. Why is PNB interesting
pnbindia.in | NSE : PNB
The second largest Public Sector Bank in terms of total business and deposits is available at very attractive valuations in terms of PE and P/B given the outlook for 50%+ PAT growth in FY25. The outlook is supported by a strong execution as PNB looks on track to deliver as per FY25 guidance. 2. 2nd largest Public Sector Bank
Second Largest Public Sector Bank in terms of Total Business and Deposits
3. FY22-24: PAT CAGR of 51% & Net Interest Income CAGR of 17%
4. FY24: PAT up 229% & Net Interest Income up 16%
5. Q1-25: PAT up 196% & Net Interest Income up 10% YoY
6. Business metrics: Improving return ratios
7. Outlook: 50%+ PAT growth in FY25
i. FY25: 50% PAT growth
ROA increasing from 0.54% in FY24 to 0.8%+ in FY25 implies a 50%+ growth in PAT in FY25
I am not revising the ROA guidance 0.8%. I can only give one guidance, because I have given last time guidance that 1% ROA will be exit of the current financial year ’24-‘25. So, I think we will be in a position to achieve this 1% ROA before the exit of the current financial year,
8. PAT growth of 196% & Net Interest Income growth of 10% in Q1-25 at a PE of 10
9. Do I stay?
If I hold the stock then one may continue holding on to PNB
Based on FY24 & Q1-25 performance against guidance for the year, PNB management looks on track to meet its guidance for FY25
Credit growth we have given guidance of 11% to 12%, we achieved 12.20%.
Deposit growth 9% to 10%, 8.5% we achieved.
CASA here we have around 42%, it was 40.08%,
PNB is in the middle of a very strong run. It has delivered sequential growth in PAT on QoQ in all the 4 quarters of FY23 and FY24. The trend continues in Q1-25
The outlook for PAT growth of 50%+ in FY25 provides a reason to continue with PNB
10. Do I enter?
If I am looking to enter PNB then
PNB has delivered PAT growth of 196% & net interest income growth of 10% in Q1-25 at a PE of 10 which makes valuations quite reasonable.
Outlook for PAT growth of 50%+ for FY25 at a PE of 10 makes the valuations quite attractive.
With a book value of Rs 73.11 against a current price of Rs 111 as of Q1-25 end implies that PNB is available a price to book of 1.5 which makes the valuations reasonable
While PNB is guiding for GNPA below 5% and NNPA below 0.5% in FY25, one needs to keep a watch on asset quality given that NPA has been a severe problem in the past
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