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[Lavanay]

CMP: 32.85
Target 50 ++

PNB Gilts (Rs.34.75) is a safe bet on reaction at Rs.32.85 level as interest rates are expected to soften. The company has reported encouraging results for the first three quarters of FY08. Net profit rose 67.88% to
Rs.19.91 cr. for Q3FY08 as against Rs.11.86 cr. in Q3FY07. Sales rose 62.35%to Rs.57.13 cr. in Q3FY08 from Rs.35.19 cr. in Q3FY07.

EPS for the first 9 months was Rs.3.8 and is likely to be around Rs.5.5 for full FY08. The company paid a good dividend of 25% for FY04, which was almost 33% of the average net profit. Going by this trend, it may declare
around 18%-20% for the current year, which is a very attractive dividend yield. Investors can keep accumulating this stock for good long term growth. There is also a possibility of merger with PNB Bank.

The stock has reacted from a high of Rs.54 to the current level where the downside seems to be very limited.