This PSU Banking Stock Grew 37.58% In 1 Month, Brokerage Bullish On Stock, Buy For Robust Gains

Renowned brokerage firm Ashika Stock broking in its weekly report published on 3 December 2022 has placed a "Buy" call on Punjab National Bank, a leading Midcap PSU banking stock, with a target price of Rs 62 per share. According to the given Target Price, if you buy the stock at the Current Market Price, you can expect a potential gain of 15% in 12 months. It has a market capitalisation of Rs 59,459.48 crore.

Stock Outlook

The stock of Punjab National Bank last traded at Rs 54 apiece on NSE, surging 1.41% from its previous close. The stock hit its fresh 52-week high level at 55.65 on 25 January 2022, whereas, it touched its 52 week low level at Rs 28.05 on 20 June 2022, respectively. 

Last week, it has gained 0.75%, whereas in the past 1 month it gave 37.58% positive returns. In 3 months, it gave 53.19% positive returns. In the last 1 year, it gave 40.26% positive return. However, on the long term investment period of 3 and 5 years, the stock fell by 17.87% and 68.51%, respectively.

2QFY23 Results & Performance

PNB reported mixed set of 2QFY23 numbers. Pre provisioning operating profit grew by 38% YoY to Rs 5,570 crore. Domestic margin expanded by 21 bps QoQ to 3.11%. On the asset quality front, slippages were lower by 8% QoQ to Rs 6,000 crore. Healthy recoveries and steady upgrades led to a 79bp/48bp QoQ improvement in GNPA/NNPA ratio to 10.5%/3.8%. PCR during the quarter grew by ~150bp QoQ to 66.3%.

Loan book grew by 15% YoY and 4.1% QoQ to Rs 7.7 trillion, fueled by healthy traction across most segments. Retail/Agri grew 6.2%/5.3% QoQ, while the Corporate portfolio rose 1.6%. Within Retail, Personal/Vehicle/Housing loans surged 10.5%/4.4%/3.1% QoQ in 2QFY23. The management has revised its credit growth guidance for FY23 upward to 12- 13% from 10% as there are ample opportunities to grow. Management has also revised its FY23 NIM guidance upward to 2.9-3%, an improvement of 10 bps.

Brokerage's views

According to the brokerage, the PSU Banking stocks continue to outperform as the PSU bank index has posted resolute breakout above CY 21 highs and past five-year down trend line indicating strong structural uptrend and one of the preferred pick within the PSU banking space is PNB which we expect to outperform. Prices has generated a breakout above a last 2- years range signalling strength and offers fresh entry opportunity in the longer-term perspective. Hence one can expect the stock post breakout to rally higher towards 63 being the 150% price extension of the rally since Set'20.

Disclaimer

The stock has been picked from the brokerage report of Ashika Stock Broking. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.