Punjab National Bank: Diwali Muharat Picks by Emkay

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1.7x FY2012E
CMP : Rs 1,326
RECO : BUY
TP : Rs 1,500

Investment Rationale
§ Higher margins: The bank has been consistently reporting margins in the range of 3.0-3.5% over the last five
year, among the highest in the peers, benefiting from higher CASA share (41%).

§ Robust return ratios: The bank’s return ratios have been one of the best among peers with RoE of 24% and
RoA of 1.4%.

§ Superior Cost/Income (C/I) ratio: The bank C/I ratio, which reflects the operating efficiency of the bank, is 40%,
one of the lowest among the peers.

Valuations
§ At the CMP, the stock is quoting at 2.2x FY11E ABV and 1.7x FY12E ABV with a likely average RoE of 24% over
FY11-12E