Punjab National Bank – BUY

Kotak Securities is recommending buying Punjab National Bank [PNB] at current levels Rs 481, with a target price of Rs 680, potential upside of 40%.

PNB is well positioned to capitalize on growth opportunities in the Indian market. PNB is expected to have a loan growth of 21.5% and 19.7% in FY08E and FY09E, respectively. In the same period, deposits are expected to rise 17.7% and 16.1%, respectively, and investments are expected to rise 8.2% and 8.4% in FY08E and FY09E, respectively.

PNB is expected to grow its earning by 24.3% and 25.2% in FY08E and FY09E, respectively. Full year profit is estimated to be at Rs.19.14 bn and Rs.23.97 bn for FY08E and FY09E, respectively resulting into an EPS of Rs.60.70 and Rs.76.01. The adjusted book value is estimated to be Rs.344.55 and Rs.416.49, for FY08E and FY09E, respectively.