PNB Shares Surge Up 5% as Q1 Net Profit Jumps Over Three-Fold, Brokerages Pinpoint Major Upside

PNB Shares Surge Up 5% as Q1 Net Profit Jumps Over Three-Fold, Brokerages Pinpoint Major Upside​

PNB shares saw a strong rally on Monday, climbing more than 5 percent in intra-day trade following the state-owned lender's release of its June quarter earnings. The stock surged to Rs 111.68 on the NSE during one session before stabilizing at Rs 109.64 (up 3.66 per cent) later in the day.

This positive movement was fueled by a sharp increase in standalone net profit, which reportedly rose over three-fold compared to the corresponding period of the previous financial year. Brokerages have also reacted positively, setting high growth targets for the bank.

Financial Highlights and Profit Drivers​

PNB reported a substantial standalone net profit of Rs 5,253 crore for the quarter ending June 30, 2026. This figure contrasts sharply with the Rs 1,675 crore recorded in the prior financial year. The Chief Executive Officer (CEO) and Managing Director, Ashok Chandra, confirmed that this result represents the bank's highest-ever first-quarter profit of over Rs 5,000 crore.

The dramatic rise in profitability was primarily attributed to a significant reduction in tax liability after the bank transitioned to the new tax regime. Mr. Chandra noted that the migration resulted in a tax liability reduction amounting to Rs 3,358 crore, which directly boosted the bottom line.

Brokerage Opinions Signal Strong Future Growth​

Following the earnings announcement, brokerages immediately set bullish targets for PNB stock. Motilal Oswal maintained its 'Buy' rating on the share with a target price of Rs 135, suggesting an approximate upside potential of 28 per cent.

Motilal Oswal noted that asset quality remains strong, citing declining provisions and lower operating expenses due to fewer AS-15 provisions and decreased PSLC costs. The brokerage views this as underpinned by modest business growth but sees potential for future expansion.

JM Financial upgraded its rating on the stock from 'Reduce' to 'Add', raising the target price from Rs 110 to Rs 120. This upgrade was based on PNB reporting a healthy performance, with profit after tax growing 214 per cent year-on-year.

Asset Quality and Core Performance Analysis​

Both brokerages emphasized the resilience of the bank's asset quality as a key support factor. Motilal Oswal pointed to lower slippages and no significant stress in asset trends. They estimated FY27 return on assets (ROA) at 1.06 per cent and return on equity (ROE) at 15.4 per cent, maintaining their 'Buy' rating.

JM Financial also highlighted resilient asset quality, noting lower gross and net slippages. The brokerage noted that PNB continues to build prudential buffers ahead of anticipated credit loss implementation.

Net interest income saw significant growth, rising by 2 per cent year-on-year and 4 per cent sequentially, according to JM Financial. This expansion in the net interest margin was credited to lower funding costs and a continuous reduction of low yielding exposures.

Management Guidance and Future Outlook​

PNB management guided for loan growth of around 12-13 per cent in FY27. The bank is also expected to achieve a return on assets exceeding 1 per cent and credit costs below 0.4 per cent in FY27, as projected by Motilal Oswal.

JM Financial noted that despite balance sheet repricing, loan growth remained healthy, reflecting management's confidence in further margin improvement during FY27. The brokerage also pointed out the support provided by FCNR mobilisation to PNB's funding profile, prompting them to raise their earnings estimates for both FY27 and FY28.