I’d say it’s too early to say if PSU asset quality has started to improve. There is an inherent cyclicality to asset quality which keeps playing out. Last couple of years saw NPAs bottoming out which led to higher profits for lenders and more impetus for the latter to grow their loan book. But as we have started to see from the increasing provisioning of leading lenders, NPAs are now picking up and in some years they might start peaking out. Then we’ll see real difference between high quality lenders with strong risk management and the others. So let’s wait out 1-2 years.
Also I won’t be sure of quality of PSU management. Most CEOs are appointed by policy of revolving door with many pushing retirement age, with no real incentive to upset apple cart, and even the best ones find their hands tied with bureaucracy.
But again I could be biased against PSUs based on my experience with their stocks in the past and this time it could be different as you pointed out.
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