A few broking houses are recommending their clients to 'buy' shares of Punjab National Bank (PNB) despite the sharp decline in the lender's second quarter profit and mounting concerns over its deteriorating asset quality.
While analysts have cut their target price on PNB shares, the stock's inexpensive valuation has persuaded them to recommend it to clients.
"We have adjusted our estimates and target price downwards to factor in the continued asset quality deterioration. The bank structurally has lower cost of deposits than peers and has cyclically already experienced relatively higher asset quality pain. That said, valuation wise, the stock trades at even below the lower end of its historical range, factoring in most of the fundamental concerns. Hence, we recommend an accumulate with a target price of Rs 843," Vaibhav Agrawal, vice president
