PNB - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 3.6

📊 Financials: Punjab National Bank (PNB) has shown strong quarterly profit growth (PAT ₹4,904 Cr vs ₹1,675 Cr). ROE at 14.2% is healthy, though ROCE at 6.3% is modest. Debt-to-equity ratio of 12.5 reflects the inherent leverage in the banking sector, but manageable under regulatory norms. EPS at ₹13.6 supports earnings stability.

💹 Valuation: Current P/E of 8.77 is slightly above the industry average of 7.89, suggesting fair valuation. Book value ₹118 vs CMP ₹120 indicates a near 1x P/B, which is reasonable. PEG ratio of 0.13 highlights attractive growth relative to valuation. Intrinsic value appears aligned with CMP, offering limited undervaluation.

🏦 Business Model: PNB operates as a public sector bank with a wide retail and corporate lending base. Competitive advantage lies in its large branch network and government backing. However, asset quality and provisioning remain key risks in the banking sector.

📈 Entry Zone: Technically, support lies near ₹100–₹110. CMP at ₹120 is close to resistance (₹128). Entry is favorable on dips closer to ₹105–₹110 for margin of safety.

📌 Long-term Holding: With improving profitability, stable ROE, and fair valuation, PNB can be considered for long-term holding. Investors should monitor asset quality and provisioning trends for sustained performance.

Positive

• 📈 Strong quarterly PAT growth (₹4,904 Cr vs ₹1,675 Cr).
• 💰 Attractive dividend yield of 2.43% provides income support.
• 📊 Healthy ROE of 14.2% indicates efficient shareholder returns.
• 🏦 Large branch network and government backing ensure stability.

Limitation

• ⚠️ High debt-to-equity ratio (12.5) inherent to banking sector.
• 📉 ROCE at 6.3% reflects modest capital efficiency.
• 💸 Asset quality risks and provisioning requirements may impact earnings.

Company Negative News

• 📉 Slight decline in trading volumes compared to weekly average.

Company Positive News

• 📈 Increase in FII holdings (+0.15%) and DII holdings (+0.48%) shows investor confidence.

Industry

• 🏦 Banking sector trades at industry PE of 7.89, close to PNB’s valuation.
• 📊 Sector outlook tied to credit growth, interest rate cycles, and asset quality improvements.

Conclusion

⚖️ PNB is fairly valued with strong profit growth and healthy ROE. Entry is advisable near ₹105–₹110 for margin of safety. Long-term holding is justified if asset quality remains stable and profitability continues to improve.

Would you like me to extend this with a peer benchmarking overlay against other PSU banks like SBI, Bank of Baroda, and Canara Bank to see relative strength?