PNB hits fresh 52-week high on DIPAM nod to sell UTI AMC stake

On November 25, early trading saw shares of Punjab National Bank (PNB) reach a new 52-week high after the lender reported that the Government of India has approved the sale of a stake in UTI Asset Management Company.

"The Exchange is hereby informed that the bank has received approval of DIPAM, Ministry of Finance for divestment of entire/part stake in UTI AMC in single or multiple tranches subject to compliance of SEBI regulations," PNB said in a stock exchange filing after market hours on Thursday.

At 9:30 am, the PNB shares were up 6 percent, hitting a fresh high of  Rs 53.90 apiece on the National Stock Exchange (NSE). UTI AMC's stock also gained 6.53 percent on the back of this development. On the NSE, the stock was trading at Rs 733.

PNB currently owns a 15.22% stake in UTI AMC. According to the public sector lender, the goal of the stake sale is to realize returns on investment.

The divestment's timing and price are still to be determined.

Four financial institutions that collectively own 45.16 percent of UTI AMC's shares—State Bank of India, Life Insurance Corporation of India, Bank of Baroda, and Punjab National Bank—promote the company.

In Q2FY23, PNB reported a 63 percent decline in standalone net profit to Rs 411 crore on account of higher provisioning for bad loans. The bank had posted a net profit of Rs 1,105 crore in the year-ago period.

Comparing the current quarter to the same period last year, the state-owned lender's net interest income increased by 30.2% to Rs 8271 crore. Emkay Global has a Sell rating and a target price of Rs 30 per share, despite the fact that the stock has increased by 42 percent so far in 2022.

"Bank reported subdued profitability, mainly due to higher provisions, as it looks to shore up PCR. Asset quality continues to improve, on the back of improved recoveries/write-offs, although it still remains sub-par compared with peers," it noted.