Buy PNB, target of Rs 625: Angel

>> Tuesday, November 25, 2008

Angel Broking has recommended a buy rating on (PNB) with a target of Rs 625 in its November 21, 2008 research report. "We believe PNB is amongst the more profitable and competitive PSBs, with relatively moderate Earnings growth and strong RoE prospects. We have a positive outlook on the Bank due to its superior CASA ratio and high core income component in Earnings, tempered by relatively moderate growth momentum. We expect the bank to deliver about 21% RoE over FY2008-10E and maintain high RoEs relative to peers over the longer term as well, underpinning higher valuation multiples."

"At Rs 451, the stock is trading at 4.9x FY2010E EPS of Rs 92.5 and 0.9x FY2010E Adjusted Book Value (ABV) of Rs 480.4. We value the stock at 1.3x FY2010E ABV to arrive at a 12-month Target Price of Rs 625,implying an upside of 39%. We recommend a Buy on the stock," says Angel Broking's research report.