PNB's Q4 profit soars 52%. But the stock stays flat

Punjab National Bank is pulling in profit, but not pulling up its stock.

The bank reported a solid 52 per cent jump in net profit for the Q4 FY25 quarter, clocking Rs 4,567 crore. Asset quality improved, bad loans fell, and provisions dropped sharply. Yet, PNB shares barely budged, closing at Rs 94 on May 7 on the BSE.

Despite doubling its profit for the full year and announcing a Rs 2.90 per share dividend, the stock continues to trade well below its 52-week high of Rs 138.50.

So what's holding it back?

What went right this quarter

• Total income rose 13 per cent YoY to Rs 36,705 crore
  
• Net interest income (NII) grew 3.8 per cent to Rs 10,757 crore
  
• Non-interest income was up 11 per cent at Rs 4,716 crore
  
• Gross NPAs dropped to 3.95 per cent (from 5.73 per cent a year ago)
  
• Net NPAs fell to 0.40 per cent (from 0.73 per cent)
  
• Provisions halved to Rs 588 crore
  
• Final dividend of Rs 2.90 declared

PNB's cleanup act on bad loans is clearly paying off. A stronger balance sheet, lower provisioning, and a growing interest book are helping margins.

Why the stock isn't celebrating

The numbers are good, but investors want more than just good.

At a price-to-book ratio of 0.89, the stock looks cheap. But cheap doesn't always mean cheerful. Some of the hesitation could be due to:

• Broader market jitters
  
• Concerns around public sector banks' exposure to stressed sectors
  
• Scepticism on sustainability of earnings growth

Analysts remain cautious. While many maintain a 'Hold' rating, the average target price is Rs 109 — about 15 per cent upside from here.

How PNB stacks up against peers

Value Research Online Ratings

Value Research Stock Rating gives Punjab National Bank an overall rating of 3 stars out of 5. The company's specific scores are as follows:

• Quality Score: 4/10
  
• Growth Score: 5/10
  
• Valuation Score: 6/10
  
• Momentum Score: 3/10

Final word

PNB's turnaround is real. The profit growth, asset clean-up, and dividend payout are all solid signs of progress.

But the market is in no rush to reward it. Maybe it's waiting for more quarters of consistency. Maybe it's just public sector fatigue. Either way, for long-term investors willing to bet on a PSU revival story — and don't mind a bit of patience — PNB might just be worth watching.

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Disclaimer: This story was created with the assistance of artificial intelligence and is intended for informational purposes only. Please take it with a pinch of salt and do your own research or consult a financial advisor before making investment decisions.