PNB shares jump 4% after Q4 results but Jefferies, Motilal, other brokerages are cutting target prices; here's why

Synopsis

Punjab National Bank shares saw a significant jump on Wednesday. The lender reported a 14% rise in net profit for the fourth quarter of FY26. This positive result led brokerages to maintain their 'Buy' ratings. However, some target prices were revised by the brokerages. The bank also announced a dividend of Rs 3 per equity share.

The shares of Punjab National Bank (PNB) jumped nearly 4% on Wednesday after the lender reported a 14% rise in net profit to Rs 5,225 crore for the fourth quarter of FY26 from Rs 4,567 crore in the same period last year, with brokerages maintaining their ‘Buy’ ratings but revising the target prices.

The PSU bank released its results on Tuesday. Its net interest income (NII) declined nearly 4% to Rs 10,380 crore in the January-March quarter of the financial year 2026, from Rs 10,757 crore in the corresponding quarter of the previous financial year.

Asset quality improved sequentially, with gross NPA ratio reducing to 2.95% in Q4 FY26 from 3.19% in Q3 FY26. Meanwhile, the Net NPA ratio reduced to 0.29% in the quarter under review, from 0.32% in the previous quarter.

Along with the Q4 results, PNB announced a dividend of Rs 3 per equity share, equivalent to 150% of the face value of Rs 2 each.

Jefferies on PNB

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Jefferies maintained its ‘Buy’ rating for the shares of PNB, but reduced its target price to Rs 130 apiece from Rs 134 apiece. The latest target price implies an upside potential of more than 20% from the stock’s previous closing price of Rs 107.89 apiece on NSE.

The international brokerage said that the company’s profit beat expectation, as reversal of retirement benefits and write-back of provisions compensated for weaker NII. It highlighted that the bank’s loan growth was led by overseas and MSME segment. Corporate growth was broadly inline while retail was softer.

Jefferies said that the NII disappointed for another quarter with NIM contracting 5bps QoQ and 34bps YoY due to the impact of the repo rate cut and limited easing in deposit costs. Deposit growth remained stable at 9% YoY and with an LDR ratio of 72%, bank can continue to grow loans faster than deposits, the brokerage said. “Even as management expects a gradual NIM recovery, supported by a higher share of RAM loans, improved CASA mix, and lower incremental deposit costs, we see risks to guidance due to lower exit rate of margins,” it added.

It highlighted that bank benefited from the release of standard asset provisions of Rs 7 billion, following changes in the RBI's large borrower framework. “We tweak earnings as we factor in lower margins, offset by lower opex & provisions. We expect the bank to deliver 12% Cagr in loans over FY26-29, credit costs of 0.4% and see the bank delivering ROA of 0.8% in FY27,” Jefferies said.

Motilal Oswal on PNB

Motilal Oswal Financial Services maintained its ‘Buy’ rating for PNB shares but reduced its target price to Rs 135 apiece. The latest target price implies an upside potential of more than 25% from the stock’s previous closing price.

“PNB reported a mixed quarter, with earnings beat led by controlled provisions and opex, while margins declined by 5bp QoQ. Provisions came in lower, aided by a reversal of standard provisions, while opex was lower due to a reversal in AS-15-related expenses. Business growth remained modest, and management guided for loan growth of ~12-13% in FY27. Asset quality trends were healthy, although slippages saw a marginal uptick on account of seasonality,” it said.

Elara Capital on PNB

Elara Capital held an ‘Accumulate’ call on the shares of PNB and cut its target price to Rs 125 apiece, implying an upside potential of around 16% from the stock’s previous closing price. PNB delivered softer Q4 FY26, and the overall trends have been volatile, the brokerage said.

"The investment argument thus relies on recovery potential than on core delivery, which we still believe has some catch -up to do. Following higher-than- expected NIM pressure, we prune our EPS by 2-3% for FY27E,” it added.

Emkay on PNB

Emkay retained its 'Buy' call on PNB shares but reduced its target price to Rs 135 apiece. "Considering moderate growth, margins, and pressure on treasury, we trim our earnings estimate by 5-7% and cut our target price to Rs 135 (based on 0.9x FY28E ABV + subs/investment value at Rs 10/share)," the brokerage said.

It cited the stock’s cheap valuations for the ‘Buy’ call.

PNB share price

PNB shares jumped nearly 4% to trade at Rs 111.74 apiece on NSE on Wednesday morning. After the release of the results on Tuesday, the stock closed nearly 1% lower. The shares of the company have fallen around 1% in one week but gained 3% in one month. The stock jumped 16% in one year.

From the lens of a longer term, the shares of Punjab National Bank have surged 109% in three years and more than 200% in five years.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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