Punjab National Bank Has Morgan Stanley 'Underweight', Citi In 'Sell' Mode Post Q1 Update

Morgan Stanley and Citi Research maintain a bearish stance on Punjab National Bank Ltd. following the first quarter business update.

Morgan Stanley has maintained 'underweight' rating for Punjab National Bank with target price of Rs 100, while Citi Research retained 'sell' with target price of Rs 101.

Morgan Stanley highlighted that as per Punjab National Bank's first quarter initial update, loan growth has decelerated and now is in line with the system. The brokerage noted that domestic loans or deposit growth is moderated compared to last quarter.

It further highlighted that the bank's domestic loan book rose 1.3% quarter-on-quarter/9.7% year-on-year, compared to 13% year-on-year last quarter. While its domestic deposits rose 1.7% quarter-on-quarter/12.2% year-on-year, against 13% year-on-year last quarter. "Bank continues to gain market share, but likely at lower spreads," it added.

As per Citi, the bank's Q1 business update had advance growth of 1.3% quarter-on-quarter, while deposits growth was at 1.4% quarter-on-quarter.

Punjab National Bank's overseas advances were broadly flat in first quarter of fiscal 2026, same as that in fourth quarter of fiscal 2025.

Citi expects bank's RAM segments to be the primary growth driver. "The bank's deposits growth stood at 12.8% year-on-year or 1.4% quarter-on-quarter vs 14.3% in FY25," as per business update.

Management has guided for loan growth of 11-12%, deposit growth of 9- 10% and NIM of 2.8-2.9% for FY26.

Based on the management's guidance, the brokerage is building in approximately 2% quarter-on-quarter fall in NII and 12bps quarter-on-quarter fall in NIMs given higher EBLR book. Contained credit cost at approximately 20bps could help it register RoA of 0.9-1%.