PNB shares jump 8% as Q2 profit rises; brokers target Rs 140

Punjab National Bank shares rose around 8% to Rs 125.22 on the NSE during trading on Monday, October 19, after the state-owned lender posted a 13% year-on-year increase in quarterly standalone profit. Economic Times Markets reported that the earnings beat brokerage expectations, putting the stock on course for its largest single-day gain in more than three years.

Jefferies, Motilal Oswal and JM Financial each raised their price target to Rs 140. The quoted share price is an intraday snapshot, not a closing price or a live market feed.

Interest income grows as bad-loan ratios decline

PNB reported standalone net profit of Rs 5,532 crore for July–September, the second quarter of FY27, against Rs 4,904 crore a year earlier. The results were announced on Friday, October 16.

Net interest income—the difference between interest earned and interest paid—rose about 11% to Rs 11,601 crore from Rs 10,469 crore. Operating profit increased 4% to Rs 7,532 crore.

The gross non-performing asset ratio declined by 90 basis points to 2.55%, while the net NPA ratio fell by 11 basis points to 0.25%. These ratios measure the share of loans classified as non-performing before and after accounting for provisions, respectively.

Why the brokerages raised their targets

Jefferies retained its Buy rating, saying stronger net interest income, higher treasury income and lower provisions outweighed higher operating expenses. It linked improved net interest margins to a better deposit and loan mix, including a reduced share of bulk deposits and inter-bank participation certificate exposures.

Jefferies’ Rs 140 target implied more than 20% upside from the previous NSE closing price of Rs 116—not from Monday’s higher intraday price. Brokerage targets are assessments of potential value, not assured returns.

Motilal Oswal also retained a Buy rating and increased its earnings estimates. It cited lower provisions and other income as drivers of the earnings beat, alongside an eight-basis-point sequential expansion in margins. The brokerage said PNB had also made additional standard-asset provisions to prepare for a transition to expected credit loss provisioning.

JM Financial upgraded PNB from Add to Buy and lifted its target from Rs 120 to Rs 140. It said profit exceeded its estimate by 8%, supported by margin expansion, 24% year-on-year fee-income growth and credit costs of three basis points. The brokerage also reported loan growth of 16% year on year.

Asset quality remains central to the outlook

Motilal Oswal noted a small increase in fresh bad loans linked to one infrastructure corporate account, but said there was no significant stress elsewhere in the portfolio. It reported management guidance for return on assets above 1% and credit costs of 0.25–0.30%.

According to JM Financial’s account, management expected a further seven-to-nine-basis-point margin improvement in coming quarters, supported by repricing of repo-rate-linked loans and stable funding costs. That remains guidance rather than a realised outcome.

The report contains two different return-on-assets figures: 1.05% in its results account and 1.09% in the JM Financial commentary. It does not explain the difference, so the figures should not be treated as interchangeable.

The ratings and price targets are the respective brokerages’ views, not investment recommendations from BharatVox.