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Buy PNB, target of Rs 721: Motilal Oswal

Posted on: May 26th, 2009 and is filed under Brokerage Recommendations.

Motilal Oswal has maintained its buy rating on Punjab National Bank with a price target of Rs 721 in its report dated May 25, 2009.

“Punjab National Bank’s 4QFY09 PAT at Rs 8.7 billion was higher than our estimate of Rs 8.1 billion. We like PNB for its inherent strengths of large branch network in the cash-rich North India, strong liability side of balance sheet, higher sustainable margins, strong tier-I at 9%+ and improved asset quality. We expect momentum to slow down in loan growth and fee income. However; return ratios will remain superior with RoA at 1.3%+ and RoE at 23%+. Post 4QFY09 results, we have increased our EPS estimates by 11-12% for FY10-11. We expect PNB to report EPS of Rs106 in FY10 and Rs124 in FY11. BV would be Rs 494 in FY10 and Rs 585 in FY10. The stock trades at 1.3x FY10E BV and 6.1x FY10E EPS. We have maintained buy rating on the stock, target of Rs 721,” says Motilal Oswal’s report.

source: Moneycontrol

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