Punjab National Bank - 4QFY2013 Result Review - Angel Broking

As far as operating performance is concerned, PNB delivered on expected lines, however, on the asset quality front, the bank witnessed improvement (contrary to market expectations). NII growth at 14.2% yoy and operating income growth at 12.9% yoy, came on expected lines. Operating expenses grew by 27.4% yoy, marginally above estimates and hence, the pre-provisioning profit de-grew by 2.9% yoy, slightly lower than our expectation of a flat performance on that front. On the asset quality front, the bank reported sequential improvement in Gross NPA levels by around 4% each. The bank prudently chose to increase its provision coverage ratio (up by around 300bp) over earnings and thereby increased its provisioning expenses by 43.8% yoy and reported an earnings decline of 20.6% yoy.

At the CMP, the stock is trading at valuations of 0.7x FY2015E ABV. Hence, we recommend an Accumulate on the stock with a target price of Rs. 889.

Source : Equity Bulls

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