The sharp downward reaction in the stock was on account of deterioration in asset quality. Gross non-performing assets, as a percentage of advances, stood at 4.66 per cent in the September quarter against 3.34 per cent in the June quarter. Net NPAs were 2.69 per cent of advances in the September quarter against 1.68 per cent in the June quarter.
The bank set aside Rs 1,074 crore as provisioning for bad loans against Rs 710 crore last year.
PNB was the top Nifty loser. Shares in the lender ended nearly 7 per cent lower at Rs 749.05 on the BSE, while the broader BSE banking index fell 0.9 per cent.
"Overall, the results look disappointing... Gross NPAs have gone up significantly... It has a big restructuring book and slippages might have come from there," Hatim Broachwala of Karvy told NDTV.
The results highlight the contrasting performance of state and private sector lenders in India. During tough spells in the economy, loans made by state-run banks, which account for 70 percent of the market but whose lending decisions are not always driven by purely commercial factors, are more likely to fall into default.
Many government-owned lenders are exposed to the beleaguered state electricity boards, troubled power and infrastructure projects, and debt-laden firms such as Kingfisher Airlines, Air India and Deccan Chronicle.
"It is difficult to say whether the worst is over," said K. R. Kamath, Chairman of Punjab National Bank (PNB), India's second largest government-owned lender by assets.
"It is a reflection of what is happening in the economy. It all depends how the economy behaves in the next 3-6 months," he said.
Bad loans at Indian Overseas Bank, a smaller state-run lender, rose to 2.25 percent from 1.21 percent a year ago, it said on Friday, sending its shares down over 8 percent.
India is battling high inflation, a yawning fiscal deficit and flagging growth amid political paralysis. Ratings agency Standard & Poor's has said the country faces a one-in-three chance of a downgrade over the next 24 months.
Infrastructure and power projects mired in land acquisition hurdles and corruption scandals have already started to pinch banks, which are either restructuring loans to these projects or classifying them as bad. Most private sector banks have stayed away from project financing.
(With inputs from Thomson Reuters)