Buy Punjab National Bank(Fundamental Call On Dec05, 08)

Co Name: Punjab National Bank Reco: Buy
CMP: Rs 445 (around)
Best Buy Level: Dip around 420-425 (accumulate at and below this level)
Target Price: Rs 475-480 (1-3 months), Rs 530(12 months)

Investment Rational:
1. Fundamentally, PNB is amongst the more profitable and competitive PSBs, with relatively moderate but steady Earnings growth and strong RoE prospects.
2. At Rs 445, the stock is trading at 4.8x FY2010E EPS of Rs 92.5 and 0.9x FY2010E Adjusted Book Value (ABV) of Rs 480.4. We expect the bank to deliver about 20% RoE over FY2008-10E and maintain high RoEs relative to peers over the longer term as well, underpinning higher valuation multiples.

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