Punjab National Bank (PNB) reported 1QFY26 PAT of INR16.7b (48% YoY decline, 60% miss) amid higher taxes. The bank opted for the new tax regime, incurring a one-time charge of INR33.24b. NII remained broadly flat YoY/declined 1.7% QoQ to INR105.8b (in-line), while NIMs contracted 11bp QoQ to 2.7% (2.84% domestic NIMs). Other income grew 46% YoY (11.7% QoQ) to INR52.7b (21% beat) amid better fee income and robust treasury gains. Loan book grew 11% YoY (1.3% QoQ), while deposits grew 12.9% YoY (1.5% QoQ). As a result, the CD ratio stood broadly stable at 68.7%. Slippages stood at INR18.9b vs INR17.6b in 1QFY25. GNPA/NNPA ratios improved 17bp/2bp to 3.78%/0.38%. PCR ratio stood at 90.3%. We cut our earnings estimates by 12% for FY26 and estimate RoA/RoE at 1.0%/15.2% in FY27. Reiterate BUY with a TP of INR130 (1.0x FY27E ABV).