PNB - Asset quality turnaround boosts profitability... - ICICIdirect

PNB posted spectacular results as asset quality improved with absolute GNPA improving sequentially after 15 quarters. GNPA was flat QoQ at Rs.14000 crore as fresh slippages were on lower side at Rs.2968 crore (Rs.5150 crore in Q2FY13). Fresh restructuring in the quarter was Rs.3700 crore taking the total outstanding restructured assets to Rs.30329 crore (10.2% of total credit).

The major sectors restructured in Q3FY13 include power-Rs.1185 crore, drilling-Rs.1392 crore and chemicals-Rs.785 crore. NIM was maintained at 3.5% while CASA ratio improved 140 bps QoQ to 38.4%. Post the improved asset quality performance delivered by PNB, we now factor in lower GNPA estimate of Rs.1438.3 crore (Rs.1581 earlier) for FY13E.

The bank is now in a consolidation phase and seems to have taken majority of pain on the book. We recommend BUY with a TP of Rs.1080.

Source : Equity Bulls

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