Published on Fri, Sep 24, 2010 at 17:45 | Updated at Fri, Sep 24, 2010 at 22:47 | Source : CNBC-TV18
The country's second largest public sector bank, Punjab National Bank (PNB) has seen a consistent rise in its stock price over the last one year. It has risen 64.5% in the last 52 weeks on the back of a strong performance in the last fiscal and its plans to increase its international footprint. It touched an intraday high today of Rs 1,300.25 and an intraday low of Rs 1,266.70. The share ended the day at Rs 1,285.15, up Rs 13.85, or 1.09%. There were pending buy orders of 445 shares, with no sellers available. The bank has a market capitalisation of Rs 40,521.10 crore.
Why the run-up?
With the economy projected to surpass 8.5% growth in GDP in the current fiscal, leading banks are expected to post higher profits on strong loan demand from the retail side as well as from corporates. A growing economy would also boost banks' asset quality while consumer defaults or bad loans are expected to fall. With well over 5,000 branches, PNB is well poised to take advantage of a growing India, after it reported a near 25% increase in net profit for the fiscal ended March 31, 2010, on the back of higher interest income.
The bank is also all set to build its footprint overseas. It has targetted to double its revenues from international operations by 2013. The bank plans to start a subsidiary in Canada to tap the country's significant punjabi population. It has foreign branches in Hong Kong, Kazakhstan, Shanghai, Singapore, Kabul and Dubai, as well as a subsidiary in the UK, and is expanding in more overseas markets. It also plans to upgrade its representative office in Norway into a full-fledged branch.
It is also looking to benefit from business opportunities due to a growth in bilateral trade by planning a foray into African markets like South Africa and Ghana and the South Asian nation, Indonesia.
The bank has charted out plans to grow inorganically in Kazakhstan, with its decision to acquire 64% stake in JSC Dana Bank for USD 24 million.
For the quarter ended June 2010, the bank reported a net profit of Rs 1,068 crore versus Rs 832 crore, a growth of 28.37% on a year-over-year basis (YoY). Its net interest income (NII) rose 40.67% to Rs 2,619 crore from Rs 1,861.8 crore YoY.
Around 15 lakh Punjab National Bank shares got traded in BSE FII segment today at Rs 1,525 per share. The block deal was executed at 17% premium to its (current) market price of Rs 1,295 per share.
What experts say:
Technical Analyst Sudarshan Sukhani says PSU banks are on a roll and have a long story ahead. "Punjab National Bank is a very good bank and the sector is excellent." Sukhani feels a two-year time horizon to get any long-term gains is the right timeframe for investment in the bank. He expects the bank to outperform the banking index.
VK Sharma of HDFC Securities said PNB continues to be a robust PSU bank and recommends investors to hold on to the stock from a long-term perspective.
Peer comparison:
| Company | Last Price | Market Cap. | Net Interest | Net Profit (Rs cr) | Total Assets (Rs cr) |
| (Rs. cr.) | Income (Rs cr) | ||||
| SBI | 3,141 | 199,478 | 70,994 | 9,166 | 1,053,414 |
| PNB | 1,285 | 40,527 | 21,467 | 3,905 | 296,633 |
| Bank of Baroda | 876 | 32,028 | 16,698 | 3,058 | 278,317 |
| Bank of India | 497 | 26,114 | 17,878 | 1,741 | 274,966 |
| Canara Bank | 574 | 23,514 | 18,752 | 3,021 | 264,741 |
| Union Bank | 385 | 19,460 | 13,303 | 2,075 | 195,162 |
| Indian Bank | 265 | 11,372 | 7,857 | 1,555 | 84,122 |
| IDBI Bank | 153 | 11,084 | 15,273 | 1,031 | 233,572 |
| Oriental Bank | 441 | 11,045 | 10,257 | 1,135 | 137,431 |
| Allahabad Bank | 228 | 10,194 | 8,369 | 1,206 | 97,648 |
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