Apart from being comfortably capitalised (capital adequacy ratio at 14.5 per cent), PNB boasts of strong profitability ratios. A high proportion of low-cost deposits enables it to sustain higher-than-industry margins (at 3.4 per cent) despite competitive lending rates.

At the current market price of Rs 705, the stock is trading at 6.5 times its trailing one year earnings and 1.6 times its adjusted June 2009 book values).

PNB managed to expand its loan book at a strong pace in recent quarters, with aggressive rate cuts improving its credit-deposit ratio to 72.1 per cent in June 2009.

The bank also increased its market share in advances from 4.7 per cent to 5.4 per cent over the last one year.

The asset quality remained stable during the quarter with both gross and net NPA, at 1.8% and 0.2% respectively, remained stable qoq. The provision cover remained robust at 89.6%. The slippages were also under control at 1.3% annualized.

Market cap of PNB a 22000 cr is much resonable compared to other banks. That leaves quite a room for appreciation for long term. ( ICICI market cap: 93000 cr,  axis bank 32900 cr)

This one of my favorite banking stock for next 5 years.