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Punjab National Bank Cluster: Ugly DucklingRecommendation: BuyPrice target: Rs675Current market price: Rs508

Is PNB selling stake in PNB Gilts?It has been reported in certain sections of the media that Punjab National Bank (PNB) is planning to sale its stake in PNB Gilts. Currently, PNB holds a 74% stake in the gilt subsidiary whereas financial institutions and public shareholders hold the remaining 26%. Sale of stake is one of the options being considered by PNB for unlocking value of its investment in PNB Gilts. The other available options include a merger of PNB Gilts with PNB and a reduction of the capital base. According to media sources, PNB had decided to opt for merging the gilt subsidiary with itself and had offered to do so at book value. However, PNB Gilts' board of directors felt that the other options would offer better valuation.

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