Accumulate PNB, target of Rs 682: Prabhudas Lilladher

Prabhudas Lilladher has upgraded its rating to accumulate on Punjab National Bank, PNB with a price target of Rs 682 in its report dated May 21, 2009.

“Punjab National Bank’s (PNB’s) Q4FY09 PAT grew by 59.2% YoY at Rs 8.66 billion. This was higher than our estimate of Rs 7.1 billion and also the market estimates, largely led by lower provisions and high treasury gains. We have discontinued giving a significant discount (Rs 40 per share for its commercial real estate exposure of Rs 60 billion). Equity capital is currently again available to real estate companies as capital markets have improved. Hence, we feel debt exposure to real estate companies should not attract any significant discounts.”

“At the CMP, the stock is trading at 1.4x FY10 P/BV, 1.5X FY10E P/ABV and 6.5xFY10E P/E in-line, with its peer group banks. However, it has one of the best RoEs (>20%) and RoAs (1.2%) in the sector, the risk of continuation of current Chairman at the helm of affairs is the only pertinent non-fundamental risk that we can envisage at the current juncture. We upgrade the stock to an ‘Accumulate’ rating, with a revised price target of Rs 682,” says Prabhudas Lilladher’s report.

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source: Moneycontrol

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