Why Emkay Global Retains Buy On Punjab National Bank Despite Moderation In Credit Growth
Emkay Global has maintained a Buy rating on Punjab National Bank (PNB) with a target price of ₹130, highlighting consistent profitability and attractive valuations. The brokerage expects stable asset quality, moderate credit growth, and a pick-up in margins to support earnings over FY26.
In Q2 FY26, PNB reported a 5% YoY rise in net profit to ₹4,900 crore, driven by broad-based net interest income (NII) growth and cost optimization. Return on assets (RoA) improved to above 1% as the bank benefited from lower tax rates under the new regime and efficient provisioning.
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Credit growth moderated to around 11% YoY during Q2FY26, with the bank targeting 11–12% expansion for the full fiscal year. Net Interest Margin (NIM) contraction was limited to 10 bps QoQ at 2.6%, supported by repricing and CRR-related benefits. Emkay expects NIM to improve by 5 bps in Q3 and another 10 bps in Q4, reflecting better lending spreads.
| Metric | Q2 FY26 | YoY / QoQ Change |
|---|---|---|
| PAT | ₹4,900 Cr | Up 5% YoY |
| RoA | >1% | Improved post-tax rate cut |
| NIM | 2.6% | Down 10 bps QoQ |
| GNPA Ratio | 3.5% | Improved 33 bps QoQ |
| Credit Growth | 11% | Expected 11–12% in FY26 |
Contained slippages and lumpy upgrades aided asset quality improvement, while the bank’s GNPA ratio reduced by 33 bps sequentially to 3.5%. Emkay notes that the recent ECL provisioning guidelines will impact CRAR by 75–80 bps, but the bank’s capital buffer remains adequate.
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Emkay values PNB at 0.8x Sep-27E Adjusted Book Value (ABV), citing improving profitability, stable RoE (~14%), and benign slippage trends. At current valuations, the brokerage finds the stock attractive for both institutional and retail investors seeking exposure to PSU banking recovery.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, believes PNB’s balance sheet discipline and consistent margin profile support Emkay’s optimistic stance. With improving asset quality, moderate growth, and favorable valuation, PNB remains a compelling PSU banking play for FY26–27.
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Related Queries On Punjab National Bank
- What are Emkay Global’s key reasons for Buy on PNB?
- How are NIM and GNPA ratios trending for PNB?
- What are PNB’s credit growth projections for FY26?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
