At a Glance
Punjab National Bank (PNB) just dropped its Q1 FY26 results. Profit fell 46% QoQ to ₹2,167 Cr (blame higher provisions), but YoY, the bank still shows resilience. Operating profit stood at ₹7,081 Cr, business grew 11.6%, and CRAR improved to 17.5%. Stock is trading at ₹108 – about 0.9x book value – cheap like your neighborhood chai but risky as a Delhi pothole.
Introduction
PNB, India’s first Swadeshi bank, is the proud PSU that has survived scams, frauds, and economic cycles with the stubbornness of an old ambassador car. Post-Nirav Modi saga, it’s rebuilt its balance sheet brick by brick. FY25 was a fairy-tale comeback with 111% CAGR profit growth over five years. But Q1 FY26 reminds us – PSU banks can’t stay drama-free forever.
Business Model (WTF Do They Even Do?)
PNB does what banks do best – take deposits, lend money, earn spreads, and hope borrowers pay back.
- Retail & Corporate Lending: Home loans, MSMEs, corporate credits.
- Treasury & Investments: Government securities hoard.
- Overseas Operations: Branches abroad, albeit limited.
- Digital Push: PNB One app, trying to look cool to Gen-Z.
It’s a typical PSU bank with government ownership (70%) – making it “too big to fail” but also “too slow to thrill.”
Financials Overview
Q1 FY26 Snapshot
- Revenue: ₹32,572 Cr (+12% YoY)
- Net Profit: ₹2,167 Cr (-46% QoQ)
- Net Interest Margin (NIM): Stable around 3%
- Gross NPA: Improved (exact % yet to be detailed, but trending lower)
- CRAR: 17.5%
FY25 Recap
- Revenue: ₹1,24,010 Cr
- PAT: ₹18,553 Cr
- ROE: 15.2%
Auditor’s Humor: Profits are there, but contingent liabilities of ₹6.9 lakh Cr loom like a Bollywood villain.
Valuation
- P/E Method
- EPS (TTM): ₹14.46
- PSU Bank P/E Range: 6–9
- Fair Value ≈ ₹14.46 × 8 = ₹115
- P/B Method
- Book Value: ₹120
- Industry P/B Range: 0.9–1.2
- Fair Value ≈ ₹120 × 1.1 = ₹132
- DCF (Assuming 10% Growth)
- Conservative estimate → ₹110–130
🎯 Fair Value Range: ₹110 – ₹130
Stock at ₹108 is a value play, but risk of bad loans is never fully priced in.
What’s Cooking – News, Triggers, Drama
- Q1 Hit: Provisions up, profit down.
- Asset Quality: NPAs improving, but history makes investors cautious.
- Dividend Yield: 2.7% – better than your savings account.
- Digital Banking: Strong traction in UPI and mobile services.
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 18,57,544 |
| Liabilities | 17,26,705 |
| Net Worth | 1,30,839 |
| Deposits | 15,77,020 |
| Borrowings | 1,05,807 |
Remarks: Big, diversified, and government-backed.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | Mar 2023 | Mar 2024 | Mar 2025 |
|---|---|---|---|
| Operating | 22,592 | -27,939 | 22,075 |
| Investing | -732 | -1,506 | -1,578 |
| Financing | 1,275 | 3,518 | -1,138 |
Remarks: Cash flows behave like a PSU employee – inconsistent but somehow functional.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 15.2% |
| ROCE | 6.3% |
| P/E | 7.5x |
| PAT Margin | 7% |
| D/E | 6.0+ (Banks always high) |
Remarks: ROE looks good, P/E cheap, but contingent liabilities are a dark cloud.
P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 86,845 | 1,09,065 | 1,24,010 |
| Operating | -6,473 | 908 | 9,413 |
| PAT | 3,359 | 9,157 | 18,553 |
Remarks: The turnaround is real, but sustainability is key.
Peer Comparison
| Bank | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| SBI | 4,90,938 | 77,573 | 9.5 |
| Bank of Baroda | 1,30,143 | 19,457 | 6.4 |
| Union Bank | 1,09,365 | 18,813 | 5.3 |
| PNB | 1,27,438 | 16,728 | 7.5 |
| Canara Bank | 1,23,951 | 18,478 | 5.3 |
Remarks: PNB lags in valuation compared to peers – but not in drama.
Miscellaneous – Shareholding, Promoters
- Promoters: Govt. of India – 70.08%
- FIIs: 5.5% (creeping up)
- DIIs: 15%
- Public: 9.3%
Sarcastic Take: Govt owns it, so the risk is socialized. Investors sleep easy… until they don’t.
EduInvesting Verdict™
PNB’s Q1 FY26 is a mixed bag – asset quality improving, but profits hit by provisions. The bank’s transformation is underway, but investors must factor in its legacy NPA risk and PSU inefficiencies.
SWOT Quickie
- Strengths: Govt backing, strong retail base, improving profitability.
- Weaknesses: High NPAs historically, contingent liabilities.
- Opportunities: Credit growth, digital banking boom.
- Threats: Rising provisions, regulatory shocks.
Final Word: At ₹108, PNB is undervalued with a margin of safety – a classic PSU bet where patience is the biggest asset.
Written by EduInvesting Team | 30 July 2025
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