These frauds would propel PNB bank to make higher provisions in the coming period, which would dent its profitability.
PNB says that quantum of reported unauthorized transactions can increase by $204.25 mn (~Rs1,300cr). These frauds would propel bank to make higher provisions in the coming period which would dent its profitability.
The stock has reacted negatively to this news and is down 6.65% to Rs104.8/share at a 52-week low on NSE.
Punjab National Bank had announced on February 14, 2018, that it had unearthed a $1.77 bn fraud at a branch in Mumbai. The fraud includes the issue of unauthorized letters of undertaking that was used mainly by firms led by Nirav Modi and his uncle, Mehul Choksi.
High impaired loans, poor capitalization, and a less supportive operating environment suggest a subdued outlook for earnings over the medium term.
We expect higher loan loss provisions going ahead. Further, we expect ROE will likely remain depressed over FY17-19E. The stock is trading at 0.7x FY20E P/BV.
We have a negative outlook on the stock.
Capitalstars Financial Research Private Limited is a research house and an investment advisory carrying out operations in the Indian Equities and Commodity market.We also provide a free trial to our client.Join our services and trade with us.
Get more details here:-
* Investment & Trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.
* CapitalStars Investment Adviser: SEBI Registration Number: INA000001647
0 comments:
Post a Comment