With many banking stocks leading the recent market correction – Bankex has lost more than 15% since third week of July against a 12% correction in Sensex – they now trade at a steep discount to their book value.
PSU banks in particular have seen their valuations touch record lows even as their latest quarterly numbers continue to reflect the NPA stress faced by the pack.
Data compiled by FE shows that many PSU banks currently trade at 0.25 to 0.30 times their book value which in some cases are their lowest valuations in seven years.
On the back of close to 32% drop in the CNX PSU Bank index the price to book value ratio (PBV) of the index declined to its lowest since February 2013.
Bank of India, Indian Overseas bank(IOB) and Oriental bank of Commerce (OBC) which have fell more than 45% in 2015 so far, currently trade at their lowest PBV in seven years.
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