PSU Banks have given 34% return YoY
PSU Banks have given scorching gains in the past one year. The Nifty PSU Bank Index has given a return of 35% YoY.
Rahul Shah of MOFSL, in his latest interview to ET, explained that these outsized gains were because the PSU Banks were unfairly neglected by investors for the past several years.
“In the last so many years, PSU banks have been hammered and not been given fair value, so most of them are still trading at one-time book. I think still there could be a good enough upside from here,” he opined.
He pointed out that the NPA cycle has peaked and it looks like the asset quality will continue to improve. Growth will keep on coming; most of them are wholesale bankers and where the economy is doing well wholesale bankers tend to do much better.
PNB has doubled in last 6 months & can still give 30% gain
He recommended three PSU Babks which are State Bank, Canara Bank and PNB. He opined that though PNB has almost doubled in the last six months, it could give a 30% upside.
“The names I like are State Bank, which leads the basket, followed by Canara Bank which has already done well. PNB, in last six months, has almost doubled but from here also I feel that it could give a 30% upside,” he said.
Public Sector Banks are well poised for Re-rating. Motilal Oswal recommends 6 Stocks to buy for upto 25% gain
Motilal Oswal has issued a detailed research report on PSU Banks in which it has recommended 6 stocks to buy. “We estimate PSBs to sustain ongoing earnings traction, aided by improved loan growth, margin stability and controlled credit costs thus driving continued rerating of the sector. A reflection on PSBs valuation history may cause trading multiples to look constrained however the quality of earnings, growth outlook and broader re-rating in PSU entities will nevertheless enable steady performance of the sector,” the report says.
Canara Bank will see re-rating and value unlocking
Canara Bank has given excellent returns of 40% YoY & 243% over 3 years. Govt holds 62.93% of equity. FIIs hold 11%. Jhunjhunwala holds 2%. Anil Singhvi has recommended a buy on the thesis that value unlocking will happen due to the IPO of its 100% subsidiary Canara Robeco Mutual Fund AMC.
Anil Singhvi says Canara Bank (CMP Rs 460) is his Pick of the Year 2024. The stock is up 40% YoY & 243% over 3 years. Govt holds 62.93% of equity. FIIs hold 11%. Jhunjhunwala holds 2%. Value unlocking will happen due to the IPO of its 100% subsidiary Canara Robeco Mutual Fund AMC https://t.co/0HOHyYVNbV
— RJ Stocks (@RakJhun) January 4, 2024