Punjab National Bank Shares Climb 7% on DIPAM Nod to Sell UTI AMC Stake; Know Details

Punjab National Bank Share Price: Shares of Punjab National Bank (PNB) scaled a fresh 52-week high in early trade on November 25, after the lender announced that it has received the Government of India’s approval for a stake sale in UTI Asset Management Company. The stock rose 7.38 per cent to hit a high of Rs 54.55 on BSE, taking its 8-day rise to 24 per cent. Friday’s rise on the counter was seen after DIPAM approved the divestment of the bank’s stake in UTI Asset Management Company in single or multiple tranches. PNB owned a 15.22 per cent stake in UTI Asset Management Company as of September 30. That stake is valued at Rs 1,394.52 crore today, following a 7.36 per cent rise in the AMC stock. The AMC stock hit a high Rs 740.15 on BSE today.

In a filing to BSE, PNB said the timeline, the value of divestment, and the price at which the shares will be divested would are yet to be decided. UTI AMC has been promoted by four sponsors, namely, State Bank of India, Life Insurance Corporation of India, Bank of Baroda, and Punjab National Bank and presently, they collectively hold 45.16 per cent of the shares of UTI AMC.

Meanwhile, CARE Ratings has revised the outlook for the bank’s AT-1, Tier II bonds, and Infrastructure bonds from ‘Stable’ to ‘Positive’. The scrip was also not under the F&O ban list on Friday.

“The ‘Positive’ outlook reflects CARE Ratings’ expectation of improvement in profitability and asset quality parameters in the medium term along with comfortable capitalisation by the bank. In the last two years ended March 31, 2022, and H1FY23, the bank witnessed a significant reduction in both, GNPA and NNPA. CARE Ratings expects the same to continue going forward,” the rating agency said.

Improvement in the asset quality parameters with gross non-performing assets (GNPA) reducing below 8.5 per cent or net non-performing assets (NNPA) below 3 per cent on a sustained basis is seen as a key positive.

PNB has seen improvement in the capitalisation levels with a significant cushion over the regulatory requirement, CARE said.

UTI AMC is promoted by four sponsors – State Bank of India, Life Insurance Corporation of India, Bank of Baroda, and Punjab National Bank – collectively holding 45.16 percent of the shares of UTI AMC.

In Q2FY23, PNB reported a 63 percent decline in standalone net profit to Rs 411 crore on account of higher provisioning for bad loans. The bank had posted a net profit of Rs 1,105 crore in the year-ago period.

The state-owned lender’s net interest income increased by 30.2 percent to Rs 8271 crore in the quarter as compared to the same period a year ago. While the stock has gained 42 percent in 2022 so far, Emkay Global has a Sell rating with target price of Rs 30 apiece.

“Bank reported subdued profitability, mainly due to higher provisions, as it looks to shore up PCR. Asset quality continues to improve, on the back of improved recoveries/write-offs, although it still remains sub-par compared with peers,” it noted.

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