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The market expects Punjab National Bank to carry on much as it has.
At today’s share price, buyers are assuming Punjab National Bank earns about 13.4% a year on the money invested in it, from here on. Over the last ten years it actually earned about 11.5% a year. The two are close, so the share price does not need the business to improve or to stumble. It needs it to keep doing roughly what it already does.
- How it is valued: Excess return — the correct lens for a bank.
- What the price assumes: 13.4% return on equity, against 11.5% the model takes from its own record.
- Ten-year record: Between FY2019 and FY2026, Punjab National Bank's revenue went from ₹59,515 crore to ₹1,49,463 crore — it compounded at about 14% a year over 7 years.
- Biggest swing factor: Credit costs. Main risk: Asset quality.
01A century-old bank, rebuilt
Punjab National Bank, founded in Lahore in 1894, is one of India's largest public-sector banks and is majority-owned by the Government of India. In 2020 it absorbed Oriental Bank of Commerce and United Bank of India.
In 2018 it disclosed a fraud of more than ₹13,000 crore involving letters of undertaking issued to companies linked to Nirav Modi and Mehul Choksi. That, along with bad corporate loans, led to heavy losses before a long clean-up.
02What the market is assuming
Work backwards from today's share price and you can see what buyers are quietly taking for granted. Here is the return on equity that price implies for Punjab National Bank, next to what the model assumes from the company's own record.
The further apart these two numbers are, the bigger the bet a buyer at today's price is making.
03Punjab National Bank's record, in plain numbers
Between FY2019 and FY2026, Punjab National Bank's revenue went from ₹59,515 crore to ₹1,49,463 crore — it compounded at about 14% a year over 7 years. It reported a net loss in FY2019, and closed the period with net profit of ₹17,096 crore. In FY2026 it kept 11.4% of revenue as net profit — against a low of -16.8% in FY2019 and a high of 12.4% in FY2025. The latest year added 6.4% to revenue, well behind its own long-run pace.
Revenue and earnings per share in ₹, return on equity and leverage as ratios — all from the filed statements.
Revenue and net profit by year (₹ crore)
| Year | Revenue | Net profit | Margin |
|---|---|---|---|
| FY2019 | 59,515 | -10,026 | -16.8% |
| FY2020 | 64,306 | 363 | 0.6% |
| FY2021 | 94,991 | 2,152 | 2.3% |
| FY2022 | 88,339 | 3,676 | 4.2% |
| FY2023 | 99,085 | 3,069 | 3.1% |
| FY2024 | 1,22,394 | 8,329 | 6.8% |
| FY2025 | 1,40,457 | 17,440 | 12.4% |
| FY2026 | 1,49,463 | 17,096 | 11.4% |
04How Punjab National Bank gets valued — and why
Excess return — the correct lens for a bankA bank is not valued with a discounted cash flow. Deposits are its raw material and interest is operating income, so enterprise value means nothing here. It is valued on excess return instead — the profit it earns above the cost of the equity funding it.
05What decides Punjab National Bank's value
Credit costs
Lower provisions have driven the profit recovery.
Return on equity
Whether returns hold through the next credit cycle.
Recoveries
Recoveries from old bad loans add to profit.
Deposit franchise
A wide branch network gives access to cheap deposits.
06What could go wrong
- Asset quality. A new wave of bad loans would reverse the gains.
- Controls. The 2018 fraud showed the cost of weak controls.
- Capital. Growth may require fresh equity.
07What the full PNB valuation shows
Sign in free to see the complete Punjab National Bank valuation
- ✓Fair value per share — from the excess-return model banks are valued on
- ✓The bank workpaper — book value, cost of equity and sustainable return, step by step
- ✓Bull, base and bear cases — and exactly which assumptions move between them
- ✓Peer comparison — against State Bank of India, Bank of Baroda and Canara Bank
- ✓Downloadable report — the full write-up, yours to keep
08Compare Punjab National Bank with peers
The same valuation, run side by side.
Punjab National Bank vs State Bank of IndiaThe largest public-sector bank, at bigger scale.→Punjab National Bank vs Bank of BarodaThe nearest public-sector peer on size and mix.→Punjab National Bank vs Canara BankTwo PSU banks head to head on the same excess-return lens.→09Questions people ask about Punjab National Bank
What was the PNB fraud?
Disclosed in 2018, it involved more than ₹13,000 crore of letters of undertaking issued fraudulently to companies linked to Nirav Modi and Mehul Choksi.
Which banks merged into PNB?
Oriental Bank of Commerce and United Bank of India, in April 2020.
PNB or Bank of Baroda — which is better value?
Both are valued on the same excess-return model; the comparison page sets them side by side.
Is Punjab National Bank overvalued?
At ₹143 the market is pricing in roughly 13.4% sustained ROE, against the ~11.5% its own record supports. That is more than it has delivered, so the price is justified only if the business can hold a rate it has not previously sustained.
What is the intrinsic value of Punjab National Bank?
It is computed from the filed financial statements using the method that fits this business (excess return), with every assumption shown alongside the result. The per-share figure and the full working are in the report.
How much debt does Punjab National Bank carry?
Debt to equity stands at 0.73, against 0.67 at the start of the period — the balance sheet is a core input to the cost of capital used here.