GNP up to 59% this year, will the momentum continue? | Popgen Tech


The stock is up 59 percent this year since December 15, while the equity benchmark Sensex has gained 6 percent over the same period.

The stock was on a winning streak after the September quarter earnings announcement. Even though the lender’s net profit fell, its net interest income (NII) grew and gross non-performing assets (NPAs) fell.

PNB saw a 62.8 percent drop in net profit to 411.3 crore for the September quarter of FY23 against a net profit of Rs1,105.2 crore in the year-ago period. Total GNP revenue in Q2FY23 increased to 23,001.26 crore against 21,262.32 in the year-ago period.

NII grew 30.2 percent to 8,271 crore in Q2FY23 from 6,352.8 crore a year ago.

The bank’s NPAs decreased to 10.48 percent of gross advances from 13.36 percent earlier. The gross NPAs or bad loans was 87,034.79 crore at the end of the second quarter of FY23, compared to 100,290.85 crore a year earlier. The net NPA, too, decreased to 3.80 percent against 5.49 percent.

Brokerage firm Prabhudas Lilladher expects PNB’s NIM (net interest margin) to improve in the second half of FY23 (H2FY23) albeit at a slower rate.

“The bank will resort to SA (savings account) rate hike only if other PSU banks increase rates. The aging related provision is made in H2FY23 to strengthen the balance sheet and boost the PCR (supply coverage ratio) though the intensity of general provisions in H2FY23 will be lower compared to H1FY23. Hence, compared to FY22, PAT (profit after tax ) for FY23 could be much better,” said Prahudas Lilladher.

We gathered the opinions of analysts and brokerage firms to understand what the fundamental and technical indicators are indicating about the stock. Take a look:

Fundamental views

Brokerage firm: JPMorgan

JPMorgan upgraded PNB from long-standing ‘underweight’ to ‘overweight’, raising its price target to 72 of 34.

“This follows from the company’s Q2 disclosure which shows that the net slip has entered negative territory and the momentum of recovery is exceeding the creation of new NPL as well as there is minimal stress in corporate loans (SMA- 2 0.1%).Provisions, therefore, are largely related to back book (net NPL 3.8 percent, restructured 1.7 percent) which is higher than SBI and Bank of Baroda and the market will likely look through a one-time book value adjustment,” JPMorgan said.

“Capital and liquidity are reasonably comfortable with CET-1 at 10.9 percent and LCR at 160 percent in an environment of tighter deposits in private banks. The stock saw an outperformance led by again recently and we believe that, with limited formation of new stress. and the growth prospects of the system improving, this trend may continue in the near term,” said JPMorgan.

Analyst: Rameshver Dongre, Research Analyst – Equity Research, CapitalVia Global Research

PNB shares hit a 52-week high 62.05 on December 15. From the annual low of 28.05, we saw a price increase of almost 121 percent.

Limited NPA generation and positive credit outlook are the main drivers of this improvement.

“Since the stock is currently priced at 0.61 times book value and has shown positive profit growth over the past five years, taking a positive position on this stock could be a wise choice for investors, ” said the analyst.

Technical views

Analyst: Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher

The stock has given a decent rally in the last two months.

She touched the high level of 62 with some profit booking seen but has been maintaining the general trend. The trend should weaken only a breach under the 55 level from here which will lead to more selling pressure.

“We anticipate that the stock will move forward after the consolidation or perhaps a short correction that may be witnessed in the coming days and after that we will continue with the upward trend for the next targets visible around 64 and 70,” said the analyst.

Analyst: Jigar S. Patel, Senior Manager – Equity Research, Anand Rathi Share and Stock Brokers

From June 2022 to date, PNB has given a huge return of almost 130 percent. At the current moment, it is claiming on its historical resistance of 55 which is adding strength to the counter.

On the indicator front, the weekly DMIs have made a super bullish structure along with increasing volume and price (refer to the chart given below) which is a very positive indication for more upside in the counter.

“One can buy at the current market price in small portions and another around 53-54 levels. The target of his head appears around 72 and stop loss would be 46,” said the analyst.

According to a MintGenie survey, an average of 17 analysts have a ‘sell’ call on the stock.

Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. We advise investors to check with certified experts before making any investment decision.

This article first appeared on MintGenie

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