Punjab National Bank: Karvy Research Report

In case of Punjab National Bank (PNB), as on end-March’ 10, Punjab National Bank (PNB)‘s total gross NPAs was Rs32.1 bn (1.71% of gross advances) and increased to Rs36.1 bn (1.82% of gross advances). Out of total exposure, Rs3.0 bn has been recognized as NPAs and provided for in Q1FY11 but extent of provisioning is unknown. In a worst case scenario, if Punjab National Bank (PNB) writes-off entire exposure in FY11, EPS would decline by close to 6.5% to Rs 131 and book value would drift by close to 1.4% to Rs613. We await complete clarity on the issue to effect the change in earning estimates and target price. We maintain our earning estimates and Out Performer rating with a target price of Rs1,562 at 2.2x adjusted book value FY12