PNB enters top 50 most-valuable stocks' club; overtakes BOB in market cap

Punjab National Bank joined the top-50 most-valuable listed stocks, in terms of market capitalisation (market cap), after its shares rallied 6 per cent to Rs 125.75, hitting a six-year high on the BSE in Friday's intraday trade.

Currently, PNB is trading at its highest level since February 2018. In the past seven trading days, it has surged 27 per cent after the state-owned bank raised its profit guidance to Rs 7,000-7,500 crore for the current financial year 2023-24 (FY24). Earlier, the second largest lender had set a profit estimate of Rs 6,000 crore for the ongoing fiscal, PTI reported.

A sharp rally in the stock price pushed the stock of PNB beyinds its peer Bank of Baroda (BoB) in market cap after a gap of over two years. At 12:10 pm, PNB stood with an m-cap of Rs 1.38 trillion, commanding 49th position in the overall market cap ranking. Meanwhile, BoB's market cap stood at Rs 1.33 trillion, the BSE data shows. 

Earlier, on October 19, 2021, BoB's market cap stood at Rs 46,232 crore and PNB's at Rs 48,669 crore, Captialine data shows.

For the October-December quarter (Q3FY24), PNB posted an over three-fold increase in its profit to Rs 2,223 crore. The bank had earned a net profit of Rs 629 crore in the same quarter a year ago.

Assets quality of the bank also improved during quarter with its gross non-performing assets (NPAs) declining to 6.24 per cent of the gross loans at the end of December 2023 from 9.76 per cent a year ago. Similarly, net NPAs or bad loans came down to 0.96 per cent from 3.30 per cent at the end of the third quarter of the previous fiscal.

"PNB reported a robust quarter as lower-than-expected provisions drove earnings and asset quality continued to improve. NII growth was healthy Q-o-Q, supported by steady margins and healthy growth in RAM segments. Asset quality improvement was aided by lower slippages and healthy recoveries," analysts at Motilal Oswal Financial Services said in a result update. 

The brokerage firm retained 'netural' rating on the stock. Its target price of Rs 100, however, is below the current market price.

Meanwhile, in the past two months, the stock price of PNB has appreciated by 55 per cent after rating agencies Icra, Care Ratings, CRISIL Ratings, and Brickwork Ratings upgraded/reaffirmed the ratings of the bank's instruments with a 'stable' outlook.

Icra said PNB's headline asset quality indicators have improved, driven by the moderation in the fresh non-performing advances (NPA) generation rate along with healthy recoveries/upgrades.

"As the bank continues to shore up the provision cover on legacy NPAs, its solvency1 profile has improved steadily. Notwithstanding the effort to support the provision coverage, which has slightly slowed down the pace of recovery of the net profitability, the profitability levels remain on an improving trajectory," the rating agency has said in its rationale.

It expects PNB to maintain sufficient capital cushion over the regulatory levels, although the impact of transitioning to provisioning, based on the expected credit loss (ECL) framework, on the capital and profitability levels will remain monitorable.