PSU banks price movement Shares of public sector undertaking (PSU) banks were in focus, with the Nifty PSU Bank index surging 3 per cent on the National Stock Exchange (NSE) in Monday’s intraday deals after Punjab National Bank (PNB) announced its September quarter (Q2FY27) earnings with profit after tax (PAT) of ₹5,500 crore, which was ahead of estimates.
PNB's share price surged 8 per cent, while Canara Bank, Punjab & Sindh Bank (PSB), Union Bank of India, Bank of India, Indian Bank and State Bank of India were up in the range of 2-4 per cent. At 09:49 AM on Monday, the Nifty PSU Bank index was top gainer among sectoral indices, up 2.6 per cent, as compared to 0.02 per cent decline in the Nifty 50.

For the September quarter, PNB reported a net profit of ₹5,500 crore, up 13 per cent year-on-year (YoY) and ahead of estimates with better net interest income (NII), higher treasury, and lower provisions offsetting higher operating expenses (opex.), analysts at Jefferies said.
Key positive was the rise in net interest margins (NIMs), reflecting improving quality of deposits (lower share of bulk-deposits) & loans (lower share of inter-bank Participation Certificate (IBPC)). ”Asset quality trends are stable with high coverage; the impact of expected credit loss (ECL) is in our estimates.

We raise estimates for better NIMs given the rate hikes & roll forward the price target to ₹140. BUY stays,” the brokerage firm said in its report. Analysts raised FY27E earnings by 17 per cent, reflecting September quarter trends, margin upside and lower contingency buffers, partly offset by lower treasury gains; FY28-29E earnings rise 8 per cent.
The brokerage firm expects the bank to deliver a 13 per cent compound annual growth rate (CAGR) in loans over FY26-29 and sees the bank delivering a return on asset (ROA) of 0.9 per cent in FY28. Valuations at 0.8x FY28E P/ABV & 6x PE are attractive, it added.

Loan growth was healthy at 6.5 per cent quarter-on-quarter (QoQ); excluding FCNR (B) related loans, domestic credit growth was strong at 5 per cent QoQ mainly aided by corporate/agricultural. Analysts at PL Capital believe that NIM may sustain at the current level supported by a rise in corporate/agri loan yields, the upcoming festive season that could spur demand for retail credit, a low loan-to-deposit ratio (LDR) at 80 per cent and external benchmark lending rate (EBLR) repricing.
For FY27/28E the brokerage firm raised NIM by 7/6bps and core PAT by an average of 6 per cent. Analysts keep the multiple at 1.0x but raise the target price to ₹160 from ₹150 as they roll forward to September 2028 ABV. It retained a ‘BUY’ rating on Canara Bank.

NIM improved by 2bp QoQ to 3.31 per cent and is further expected to improve by 5-6bp in Q3FY27 aided by rate hikes, analysts at Motilal Oswal Financial Services (MOFSL) said in the Q2 result update. Credit growth guidance was maintained at 13-14 per cent, marginally higher than deposit growth.
The bank made additional floating provisions of ₹1,500 crore for the ECL transition impact (cumulative ₹2,500 crore), with a further residual provision of ₹1,000 crore expected. On asset quality, slippages and credit costs came in lower, with asset quality improving across asset classes.

The bank maintains a best-in-class PCR, providing comfort regarding incremental credit costs. Further, the transition to ECL is expected to have a manageable impact alongside a manageable increase in steady-state credit costs, the brokerage firm said.
Analysts raised their earnings estimates by 3 per cent for FY27/FY28 and anticipate the bank to deliver an FY28E RoA/RoE of 1.4 per cent/18.7 per cent. MOFLS reiterated a 'BUY' rating on Indian Bank with the unchanged target price of ₹1,025 (premised on 1.4x Mar’28E ABV).

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