Valuation Metrics Signal Enhanced Price Attractiveness
As of early February 2026, Punjab National Bank’s P/E ratio stands at 8.63, a figure that positions it favourably against its public sector banking peers. This multiple is considerably lower than the State Bank of India’s (SBI) P/E of 13.3, indicating a more conservative market pricing for PNB’s earnings. The P/BV ratio of 0.99 further underscores the stock’s valuation appeal, suggesting that the market values the bank at just below its book value, a level often interpreted as a bargain in banking stocks.
Moreover, the PEG ratio, which adjusts the P/E for earnings growth, is at 1.11 for PNB. This is a reasonable figure, especially when compared to Bank of Baroda’s PEG of 7.38, signalling that PNB’s valuation is not only low but also justified by its growth prospects. The dividend yield of 2.38% adds an income component to the investment case, complementing the valuation attractiveness.
Comparative Analysis with Peers
Within the public sector bank universe, PNB’s valuation metrics stand out. While SBI is currently priced as expensive, with a P/E of 13.3 and an EV/EBITDA of 16.84, PNB’s valuation is categorised as very attractive. Union Bank of India also shares a similar valuation status with a P/E of 7.09 and PEG of 0.56, but PNB’s slightly higher PEG ratio reflects a more balanced growth outlook.
These valuation differentials are critical for investors seeking value within the sector, especially given the varying quality and growth profiles of these banks. PNB’s return on equity (ROE) of 11.43% and return on assets (ROA) of 0.84% indicate a stable profitability framework, while its net non-performing assets (NPA) to book value ratio of 2.70% suggests manageable asset quality risks relative to peers.
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Stock Price Performance and Market Context
PNB’s current market price is ₹122.05, marginally up from the previous close of ₹121.55, with a day’s trading range between ₹118.25 and ₹122.45. The stock has traded within a 52-week range of ₹85.50 to ₹135.15, reflecting a recovery trajectory over the past year.
When analysing returns relative to the benchmark Sensex, PNB has outperformed significantly over longer horizons. The one-year return of 22.85% dwarfs the Sensex’s 5.37%, while the three-year and five-year returns of 140.02% and 237.15% respectively, far exceed the Sensex’s 36.26% and 64.00%. This outperformance highlights the bank’s ability to generate shareholder value despite sector headwinds.
Shorter-term returns show some volatility, with a one-month decline of 2.67% compared to the Sensex’s 4.78% fall, and a year-to-date return of -1.25% versus the Sensex’s -4.17%. The one-week return of 1.58% also outpaces the benchmark’s 0.16%, suggesting renewed investor interest in the stock.
Quality and Risk Metrics
PNB’s financial quality metrics provide further context to its valuation. The ROE of 11.43% is respectable for a public sector bank, indicating efficient utilisation of equity capital. The ROA of 0.84% is consistent with industry norms, reflecting prudent asset management. The net NPA to book value ratio of 2.70% is a key indicator of asset quality, signalling that while non-performing assets exist, they remain under control and do not pose an immediate threat to capital adequacy.
These fundamentals support the bank’s upgraded valuation grade from attractive to very attractive, as the market increasingly recognises the balance between risk and reward in PNB’s current pricing.
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Mojo Score and Rating Revision
MarketsMOJO assigns Punjab National Bank a Mojo Score of 68.0, reflecting a Hold rating as of 27 January 2026, a downgrade from the previous Buy grade. This adjustment reflects a more cautious stance given the valuation shift and sector dynamics, despite the very attractive valuation parameters. The market capitalisation grade remains at 1, indicating a large-cap status with stable liquidity.
The Hold rating suggests that while the stock is attractively priced, investors should weigh the broader macroeconomic and sector-specific risks before committing fresh capital. The downgrade also signals that the upside potential may be more limited in the near term, despite the favourable valuation.
Outlook and Investment Considerations
Punjab National Bank’s valuation repositioning to very attractive is a compelling development for value-oriented investors. The stock’s low P/E and P/BV ratios relative to peers, combined with solid profitability and manageable asset quality, create a strong fundamental base. However, the Hold rating and recent downgrade indicate that investors should remain vigilant about sector headwinds, including regulatory changes, credit growth uncertainties, and macroeconomic factors.
Long-term investors may find PNB’s valuation compelling, especially given its historical outperformance versus the Sensex over three and five years. The dividend yield of 2.38% adds to the total return potential, making it a balanced proposition for those seeking income and capital appreciation.
In summary, Punjab National Bank’s valuation metrics have improved materially, signalling enhanced price attractiveness. Yet, the cautious rating revision advises a measured approach, balancing the stock’s value proposition against prevailing risks in the public sector banking landscape.
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