PUNJAB NATIONAL BANK LTD.16th Oct 2021

RECOMMENDATION : BUY

MARKET PRICE : Rs.42.55 (As on 14th Oct 2021)

TARGET PRICE : Rs.56.00

FACE VALUE : Rs.2

BSE CODE : 532461

NSE CODE : PNB

Punjab National Bank (PNB), India’s first Swadeshi Bank, commenced its operations on April 12, 1895 from Lahore, with an authorised capital of Rs 2 lac and working capital of Rs.20,000. The Bank was established by the spirit of nationalism and was the first bank purely managed by Indians with Indian Capital. During the long history of the Bank, 9 banks have been merged/amalgamated with PNB.

Post amalgamation of eOBC & eUNI w.e.f 01.04.2020, PNB has expanded its presence across India. As at the end of Jun’21, Bank has total 36851 delivery channels with a network of 10641 domestic branches, 2 International branches, 13690 ATMs & 12518 Business Correspondents. PNB is the second largest Public Sector Bank (PSB) in the country with Global Gross Business at Rs. 18,23,685 crore. The Bank continues to maintain its forte in low cost CASA deposits with a share of 45.15%. Bank’s focus has been on qualitative business growth, recovery and arresting fresh slippages.

ABOUT THE COMPANY

Year

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YEARLY RESULTS OF PUNJAB NATIONAL BANK (in Rs. Cr.)

MAR '21 MAR '20 MAR '19 MAR '18 MAR '17

INTEREST EARNED

(a) Int. /Disc. on Adv/Bills 53,682.83 36,156.25 35,416.49 32,549.21 33,701.40

(b) Income on Investment 25,347.01 16,093.74 14,621.85 13,978.71 12,605.32

(c) Int. on balances With RBI 1,902.42 2,530.73 1,937.19 2,013.40 1,365.67

(d) Others 934.14 137.75 171.60 183.53 385.69

Other Income 13,124.45 9,387.66 7,367.39 8,883.35 9,167.58

EXPENDITURE

Interest Expended 50,804.58 36,997.47 34,655.66 33,530.39 32,722.31

Employees Cost 12,296.72 7,060.02 7,047.54 9,242.37 5,482.33

Other Expenses 8,219.05 5,090.48 4,641.71 4,400.22 4,041.22

Operating Profit before Provisions and contingencies 23,670.50 15,158.16 13,169.61 10,435.22 14,979.80

Provisions And Contingencies 19,886.04 14,331.14 28,534.37 30,281.36 13,439.71

P/L Before Tax 3,784.46 827.02 -15,364.76 -19,846.14 1,540.09

Tax 1,632.03 463.68 -5,338.35 -7,261.81 638.96

P/L After Tax from Ordinary Activities 2,152.43 363.34 -10,026.41 -12,584.33 901.13

Net Profit/(Loss) For the Period 2,152.43 363.34 -10,026.41 -12,584.33 901.13

Minority Interest -132.62 -46.48 -20.09 -18.79 -51.98

Share Of P/L Of Associates 542.17 121.59 476.39 473.07 338.09

Net P/L After M.I & Associates 2,561.98 438.45 -9,570.11 -12,130.05 1,187.24

Equity Share Capital 2,095.54 1,347.51 920.81 552.11 425.59

Reserves Excluding Revaluation Reserves 83,238.38 57,770.16 41,581.33 38,249.21 38,931.97

ANALYTICAL RATIOS

a) % of Share by Govt. 76.87 83.19 75.41 -- --

EPS BEFORE EXTRA ORDINARY

Basic EPS 2.64 0.80 -20.79 -54.71 5.78

Diluted EPS 2.64 0.80 -20.79 -54.71 5.78

EPS AFTER EXTRA ORDINARY

Basic EPS. 2.64 0.80 -20.79 -54.71 5.78

Diluted EPS. 2.64 0.80 -20.79 -54.71 5.78

Key

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KEY FINANCIAL RATIOS OF PUNJAB NATIONAL BANK (in Rs. Cr.)

MAR 21 MAR 20 MAR 19 MAR 18 MAR 17

PER SHARE RATIOSBasic EPS (Rs.) 2.64 0.80 -29.68 -54.71 5.78Diluted EPS (Rs.) 2.64 0.80 -29.68 -54.71 5.78Cash EPS (Rs.) 2.05 0.54 -20.51 0.00 6.26Book Value [ExclRevalReserve]/Share (Rs.) 88.32 95.34 92.31 0.00 184.96Book Value [InclRevalReserve]/Share (Rs.) 88.32 95.34 100.10 0.00 202.85Operating Revenue Per Share 78.13 81.51 113.26 0.00 225.84Net Profit/Share (Rs.) 2.05 0.54 -21.78 0.00 4.23NP After MI And SOA / Share (Rs.) 2.45 0.65 -20.79 0.00 5.58KEY PERFORMANCE RATIOSROCE (%) 1.88 1.81 1.69 0.00 2.08CASA (%) 0.00 0.00 42.14 0.00 41.66Net Profit Margin (%) 2.62 0.66 -19.22 -25.82 1.87Net Profit After MI And SOA Margin (%) 3.12 0.79 -18.35 -24.89 2.47Operating Profit Margin (%) -13.40 -16.43 -33.35 -44.05 -17.20Return On Assets (%) 0.20 0.05 -1.21 0.00 0.16Return On Equity/Networth (%) 2.76 0.68 -22.51 0.00 3.01Net Interest Margin (%) 2.42 2.10 2.21 0.00 2.09Cost To Income (%) 44.25 41.90 58.61 63.64 41.24Interest Income/Total Assets (%) 6.39 6.44 6.59 0.00 6.55Non-Interest Income/Total Assets (%) 1.02 1.10 0.93 0.00 1.25Operating Profit/Total Assets (%) -0.85 -1.05 -2.20 0.00 -1.12Operating Expenses/Total Assets (%) 1.60 1.42 1.47 0.00 1.29Interest Expenses/Total Assets (%) 3.96 4.34 4.38 0.00 4.46VALUATION RATIOSEnterprise Value (Rs.Cr) 11,60,148.50 7,55,958.96 7,40,286.47 0.00 6,79,644.72EV Per Net Sales (X) 14.17 13.77 14.20 0.00 14.14Price To Book Value (X) 0.41 0.34 1.03 0.00 0.81Price To Sales (X) 0.47 0.40 0.84 0.00 0.67Retention Ratios (%) 100.00 100.00 100.31 100.00 99.41Earnings Yield (X) 0.07 0.02 -0.22 0.00 0.04

Shareholding Pattern an on Sep’21

Summary ❖ With deliverance of stellar performance in Q1 of FY22, the Company’s Interest Earned stood as Rs.12414.56 crs in Jun’21 as compared to

Rs.13924.49 crs in Jun’20. Whereas, the Net Profits rose up by 117.27% i.e. Rs.1168.33 crs in Jun’21 versus Rs.537.71 crs in Jun’20. In addition to this, the Statement of Changes in Equity witnessed an increase in the Equity Capital i.e. Rs.2202.20 crs in Jun’21 on contrary to Rs.1882.13 crs in Jun’20.

❖ Annually, the Company delivered robust performance in FY21, with Interest Earned grew up by 48.474% i.e. Rs.53682.83 crs in Mar’21 versus Rs.36156.25 crs in Mar’20. However, the Net Profits proliferated by 484.32% i.e. Rs.2561.98 crs in Mar’21 as compared to Rs.438.45 crs in Mar’20. In addition to this, the Statement of Changes in Equity witnessed an increase in the Equity Capital i.e. Rs.2095.54 crs in Jun’21 juxtapose to Rs.1347.51 crs in Jun’20.

❖ As per good fundamentals and fine financials, the Company is available at a fair price of Rs.42.55 with its 52 week low at Rs.26.30 and 52 week high at Rs.46.35.

❖ In view of the Promoters holding majority stake around 73.15% as well as it’s healthy valuations , anticipates that the Management is working efficiently and is committed to growth of the Company.

❖ The Shareholding Pattern as on Sep’21, shows the FIIs and the Other DIIs collectively stood with 2.27% holdings. Whereas, the Mutual Fund Houses own 2.45% stake in the Company.

❖ It is reassuring to see that Punjab National Bank Ltd. is held by KOTAK MF, EDELWEISS MF, NIPPON INDIA MF, ICICI PRU MF, SBI MF, L&T MF, DSP MF, ABSL MF, HDFC MF, UTI MF, IDFC MF, AXIS MF, BARODA MF, INVESCO MF, SUNDARAM MF, UNION MF, PGIM MF, MOSL MF, MIRAE MF, IDBI MF and a few more.

❖ On consolidated basis, the Company registered Return on Equity (ROE) and Return on Capital Employed (ROCE) around 2.76% & 1.88% respectively for the year ending Mar’21.

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1. My spouse, Mrs. Priya Sharma 2. My daughter, Ms. Priyanka Sharma 3. My son, Master Priyanshu Sharma

Note: Subject Company is a company on which buy/sell recommendation or target price is given or changed in the research report.

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