Technical Trends Shift to Bullish Momentum
The primary catalyst for the rating upgrade is the significant improvement in PNB’s technical grade, which has moved from mildly bullish to bullish. This shift is underpinned by a confluence of positive technical signals across multiple timeframes. On a weekly basis, the Moving Average Convergence Divergence (MACD) remains mildly bearish, but the monthly MACD has turned bullish, signalling strengthening momentum over the longer term. The Relative Strength Index (RSI) currently shows no clear signal on both weekly and monthly charts, suggesting room for further upward movement without being overbought.
Bollinger Bands indicate bullish trends on both weekly and monthly charts, reflecting increased price volatility with an upward bias. Daily moving averages are firmly bullish, reinforcing short-term strength. Meanwhile, the On-Balance Volume (OBV) indicator is bullish on weekly and monthly scales, signalling strong buying interest. Although the Know Sure Thing (KST) oscillator remains mildly bearish, the Dow Theory confirms a mildly bullish stance on both weekly and monthly charts. Collectively, these technical factors justify the upgrade, signalling a positive price trajectory for PNB.
Valuation Remains Attractive Amid Market Comparisons
PNB’s valuation metrics continue to favour investors, with the stock trading at ₹130.50, close to its 52-week high of ₹135.15 and well above its 52-week low of ₹85.50. The bank’s Price to Book Value stands at a modest 1.1, indicating a discount relative to its peers’ historical averages. This valuation is particularly compelling given PNB’s Return on Assets (ROA) of 0.8%, which is respectable for a public sector bank.
Over the past year, PNB has delivered a total return of 40.25%, significantly outperforming the Sensex’s 10.29% return over the same period. The stock’s Price/Earnings to Growth (PEG) ratio is 1.2, suggesting that the current price reasonably reflects its earnings growth prospects. This combination of strong returns and reasonable valuation supports the upgraded Buy rating.
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Financial Trend: Stable Yet Room for Improvement
While PNB’s financial performance in Q3 FY25-26 was largely flat, the bank’s long-term fundamentals remain robust. Net profit has grown at a compound annual growth rate (CAGR) of 85.58%, underscoring strong earnings momentum over recent years. Despite the recent quarter’s subdued results, the bank maintains strong provisioning practices, with a Provision Coverage Ratio of 79.90%, which mitigates credit risk and enhances balance sheet resilience.
However, some caution is warranted as cash and cash equivalents at ₹55,379.74 crores are at a low point, and Profit Before Tax excluding other income (PBT less OI) for the quarter was ₹1,308.75 crores, also at a low. Notably, non-operating income constitutes 79.33% of PBT, indicating reliance on non-core income streams. These factors suggest that while the bank’s fundamentals are strong, investors should monitor upcoming quarters for signs of financial trend improvement.
Quality Assessment: Strong Institutional Support and Market Outperformance
PNB’s quality grade remains favourable, supported by high institutional holdings at 22.02%, which increased by 0.81% over the previous quarter. Institutional investors typically possess superior analytical resources, lending credibility to the stock’s prospects. The bank’s long-term market performance is impressive, with returns of 174.45% over three years and 211.46% over five years, vastly outperforming the Sensex’s respective returns of 38.36% and 61.20%.
Year-to-date, PNB has returned 5.58%, compared to a negative 3.46% for the Sensex, further highlighting its resilience and appeal. These metrics reinforce the bank’s quality credentials and justify the upgrade to a Buy rating.
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Risks and Considerations
Despite the positive outlook, investors should be mindful of certain risks. The flat financial results in December 2025 highlight potential volatility in quarterly earnings. The bank’s relatively low cash and cash equivalents and the high proportion of non-operating income in PBT may signal earnings quality concerns. Additionally, the stock’s slight day decline of 0.38% on 26 February 2026 suggests some near-term price pressure.
Nonetheless, the combination of strong provisioning, attractive valuation, and improving technical indicators provides a balanced risk-reward profile for investors considering PNB.
Conclusion: A Compelling Buy Opportunity
Punjab National Bank’s upgrade to a Buy rating by MarketsMOJO reflects a comprehensive assessment across four key parameters: quality, valuation, financial trend, and technicals. The bank’s technical indicators have improved markedly, signalling bullish momentum. Valuation remains attractive relative to peers, supported by strong long-term profit growth and market-beating returns. While recent financial trends show some stagnation, the bank’s provisioning strength and institutional backing underpin its quality credentials.
Investors seeking exposure to a large-cap public sector bank with a favourable risk-return profile should consider PNB’s upgraded rating as a signal of confidence in its medium to long-term prospects.
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