HSBC has cut the price target on Punjab National Bank (PNB) to Rs 71 from Rs 92, and has maintained 'reduce' rating.
“We remain cautious despite significant underperformance due to a dim earnings outlook, significant capital erosion, and likely dilution given weak CET1 and low valuations,” HSBC analysts say in a note.
HSBC expects the fraud-hit bank to post third consecutive annual loss in FY19, hurt by higher provisioning and slower loan growth. The country’s second-largest state-run bank posted the biggest-ever loss by an Indian lender for March quarter.
HSBC has reiterated its rating due to uncertainties in the medium term in growth and asset quality. Seven of 33 brokerages rate the stock as “buy” or higher, 12 ”hold” and 14 “sell” or lower; their median price target is is Rs 94, according to Thomson Reuters Eikon data.
Up to Friday, the stock has shed nearly 50 per cent since February 12, when PNB had detected fraudulent transactions at a Mumbai branch. In comparison, Nifty PSU Bank index fell over 15 per cent in the same period. PNB shares were trading 2.4 per cent higher at Rs 84.90.