PNB shares climb on lower provisions-led profit, is it time to buy or book profits?

Shares of Punjab National Bank moved higher in early trade on Wednesday, 6 May, after the state-run lender reported a steady rise in March quarter earnings. However, the stock pared most of its gains by late morning.

The stock opened at Rs 110.05 on the BSE, compared to its previous close of Rs 107.90. It climbed as much as 3.6 per cent to an intraday high of Rs 111.75. By around 11:15 am, the stock had given up most gains and was trading at Rs 109.02, up 1.05 per cent for the day.

Open stood at Rs 110.41, while the day’s low was Rs 109.00. The bank’s market capitalisation is around Rs 1.25 lakh crore. The stock remains below its 52-week high of Rs 135.15.

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Profit rises, but margins under pressure

During market hours on Tuesday, 5 May, PNB reported a 14.41 per cent year-on-year rise in standalone net profit to Rs 5,225.11 crore for Q4FY26, compared with Rs 4,567 crore in the same quarter last year.

Operating profit rose 10.7 per cent YoY to Rs 7,500 crore. However, core income trends remained weak. Net interest income (NII) declined 3.5 per cent YoY to Rs 10,380 crore.

Net interest margins (NIMs) also contracted. Domestic NIM came in at 2.61 per cent versus 2.96 per cent a year ago. Global NIM stood at 2.47 per cent compared with 2.81 per cent YoY.

Asset quality improves, provisions decline

Asset quality showed improvement on a sequential basis. Gross non-performing assets (NPAs) declined to 2.95 per cent from 3.19 per cent in the previous quarter. Net NPAs also improved to 0.29 per cent from 0.32 per cent.

Provisions dropped to Rs 424 crore, lower than Rs 1,150 crore in the previous quarter, though slightly higher than Rs 360 crore reported a year ago.

Business growth steady, CASA improves

PNB reported an 11 per cent rise in global business to Rs 29.72 lakh crore. Domestic business grew nearly 10 per cent to Rs 28.45 lakh crore.

Global deposits rose 9.25 per cent YoY to Rs 17.11 lakh crore. Advances increased 13 per cent YoY to Rs 12.61 lakh crore.

The CASA ratio improved to 73.7 per cent in Q4FY26 from 71.28 per cent in the year-ago period, indicating better low-cost deposit traction.

Dividend announced

Alongside its results, the bank recommended a dividend of Rs 3 per equity share for FY26, equivalent to 150 per cent of the face value of Rs 2 each. The payout is subject to shareholder approval at the upcoming annual general meeting.

What brokerages say

Brokerages remained divided on the stock despite the profit beat.

Jefferies maintained a ‘Buy’ rating but cut its target price to Rs 130 from Rs 134. It noted that weaker NII was offset by lower operating expenses and provisions. The brokerage highlighted that loan growth improved and credit costs remained under control.

Citi retained a ‘Sell’ rating with a reduced target of Rs 103. It flagged continued margin compression and said loan growth remains below the system average, with reliance on MSME and overseas segments.

CLSA maintained an ‘Accumulate’ rating and cut its target to Rs 135. It said the profit beat was largely driven by lower costs, while NII and income growth disappointed.

Morgan Stanley kept an ‘Underweight’ stance with a target of Rs 88. It pointed to weaker core revenues and said one-off factors like provision reversals and recoveries supported profit.