Punjab National Bank (PNB) Limited: Comprehensive Stock Analysis Report | Scrolls
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- Sep 24
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by KarNivesh | 24 September, 2025
Overview
Punjab National Bank (PNB), founded in 1894, is India’s second-largest public sector bank with assets exceeding ₹16 lakh crores, over 10,000 branches, 13,000 ATMs, and a customer base of 180 million. Once troubled by high non-performing assets (NPAs), PNB has emerged as a turnaround success story in Indian banking, marked by improved asset quality, profitability, and digital expansion.
Financial Performance
PNB recorded its highest-ever profit in FY24, with net profit rising 172% to ₹9,107 crores from ₹3,349 crores in FY23. Total income grew to ₹1,33,294 crores, while net interest income stood at ₹40,530 crores, reflecting robust 15.7% growth. Operating profit reached ₹25,051 crores, supported by an improved net interest margin of 2.9%.
Profitability ratios also improved significantly:
ROE rose to 8.3% in FY24 from 3.3% in FY23.
ROCE improved sharply to 15.27% in FY25 from 10.82% in FY24.
ROA increased to 0.6% from 0.2% in FY23.
Asset Quality Transformation
PNB’s NPA management is one of the most notable in Indian banking. Gross NPAs fell from 16.8% in FY20 to 6.3% in FY24, while net NPAs declined to 0.9%. The provision coverage ratio improved to 90%, signaling strong buffers. The bank recovered ₹3,300 crores in Q1 FY25 and is targeting ₹16,000 crores in recoveries for FY26, including sales of stressed assets worth ₹4,000–₹5,000 crores to ARCs.
Business Segments and Growth Strategy
The loan portfolio is diversified, with Retail, Agriculture, and MSME (RAM) segments comprising 56% of advances (₹6.03 lakh crores). PNB plans to increase RAM share to 58% by FY26, targeting double-digit growth, especially in MSME and retail loans. Corporate advances form 35% of the portfolio, while treasury operations contribute significantly to revenue.
Revenue distribution in FY24:
Corporate/Wholesale Banking: 42%
Retail Banking: 29%
Treasury: 26%
The bank is also pursuing digital growth. The PNB One app has crossed 10 million downloads, and 75% of transactions are now digital. PNB recently launched a startup-focused branch and is piloting cash flow-based MSME loans with approval times under 10 minutes.
Capital Strength and Governance
PNB raised ₹8,000 crores in FY25, strengthening its capital adequacy to 15.32%, well above regulatory norms. As of June 2025, the Government of India holds 70.08% of shares, with institutional investors (20.59%) and retail (9.34%) contributing to ownership. No promoter shares are pledged, reflecting financial stability.
Market Performance and Valuation
PNB’s market capitalization stands at ₹1.30 lakh crores, making it the third-largest PSU bank. The stock has delivered a 218% return over five years and 222% in three years, though the one-year return moderated to 4.3%. Trading at a P/E of 8.4x and P/B of 1.0x, PNB is undervalued relative to industry peers. Dividend yield of 2.57% adds investor appeal.
Risks and Outlook
Key risks include rising credit costs in MSME and unsecured segments, sectoral exposure to infrastructure, and competitive pressure on margins. However, with strong government backing, improved profitability, and ambitious growth targets (₹30 lakh crores business size by FY26), PNB is positioned as a robust PSU banking play with attractive risk-adjusted returns.
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