Why are PNB shares rising for 4 sessions?

Shares of Punjab National Bank (PNB) extended their gaining streak for the fourth straight session on Tuesday as investors remained bullish on the public sector lender after it reported robust earnings in the December quarter and unveiled a plan to raise  ₹7,500 crore. The PSU bank stock touched its fresh 52-week high in intraday trade today after rising over 12% in the last four sessions.

Early today, PNB shares opened higher at ₹108.18 against the previous closing price of ₹107.52 on the BSE. Extending opening gains, the banking stock rose as much as 3.2% to hit a new 52-week high of ₹110.95. The counter has zoomed 150% against its 52-week low of ₹44.41 touched on March 28, 2023.  

At 12:15 PM, shares of PNB were trading 2.9% higher at ₹110.68, while the market capitalisation stood at ₹1.22 lakh crore. The mcap of the lender crossed ₹1 lakh crore mark in December 2023, amid sustained rally in the recent past.

PNB released its earnings for the third quarter on January 25, which showed that its net profit increased significantly by 253% to ₹2,223 crore against ₹629 crore during the same period in the previous financial year. For the nine months ended December 31, 2023, PNB recorded a net profit of ₹5,234 crore, up 288% over ₹1,349 crore in the same period in the previous year. The profit for the first nine months is much higher than ₹3,348.45 crore reported in the full financial year 2022-23.

The operating profit for Q3 FY24 stood at ₹6,331 crore versus ₹5,716 crore in the year ago period, while total income jumped to ₹29,962 crore as compared to ₹25,722 crore in Q3 FY23.

Net interest income for Q3 FY24 grew 12.1% YoY to ₹10,293 crore and for 9M FY24 increased by 18.9% to ₹29,720 crore on YoY basis.

On the asset quality front, gross non-performing assets (GNPAs) declined to 6.24% in Q3 against 9.76% in the year-ago period, while NNPAs also improved by 234 bps on a YoY basis to 0.96 % from 3.30% as on December 2022. In absolute terms, gross NPAs were at ₹60,371 crore, while net NPAs were at ₹ 8,816 C#RORE as of December’23.

As of December 31, 2023, the bank had 10,108 domestic branches, including 3,911 (39%) rural, 2,472 (24%) semi-urban, 2,001 (20%) urban, 1,724 (17%) metro, and 2 international branches. It has 12,455 ATMs and 29,768 BCs.

In a fresh filing on January 29, the lender said that its board has approved the raising of equity capital worth up to ₹7,500 crore in one or more tranches during FY24-25. The fund will be raised through qualified institutions placement (QIP), follow-on public offer (FPO), or any other permitted mode or a combination thereof in such manner, it said.

As per the company, the fundraising will ensure that the government stake in the bank does not fall below 52%. At the end of the December quarter, the government-owned a 73.15% stake in the PNB.

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