Bank & NBFC stocks have been very adversely affected in the latest stock market downturn. Apart from domestic concerns related to Political & Policy paralysis which resulted into execution delays, the deteriorating macro environment due to persistent inflation (over 9% for last 11 months) and rising interest rates have adversely affected bank & NBFC stocks.
Microsec is of the view that we are at the last leg of the rate hike cycle in India (keeping in mind the ground realities and negative data flows from IIP & PMI), and that banks and NBFC stocks are at the right valuation level for long term investment of 18 to 24 months time horizon.
Microsec cautions that while there may be asset quality side pressure with rising delinquencies, higher proportion of restructured assets (as % of Advances) and higher slippages till Q3’12, these are manageable risks and are mostly priced in and probably overdone.
Microsec’s Best Buy of Bank & NBFC stocks
| Public Banks | CMP | 52Wk High | 52Wk Low | Loan to Deposit (Mar’11)* | Interest Earned to Expended | P/B TTM | P/E TTM | P/BV 3Yr Avg | Dvd Yld(%) | CAR (%) (Mar’11) | NNPA (Jun’11) (%)* | Qtrly ROA (%) |
| Allahabad Bank | 187.65 | 270.90 | 183.00 | 70.99 | 1.50 | 1.11 | 5.98 | 0.74 | 3.20 | 12.75 | 0.60 | 0.28 |
| Andhra Bank | 130.00 | 190.15 | 124.35 | 77.52 | 1.53 | 1.06 | 5.46 | 0.96 | 4.23 | 13.23 | 0.45 | 0.36 |
| Bank of Baroda | 792.75 | 1050.00 | 778.20 | 74.87 | 1.53 | 1.41 | 7.03 | 1.05 | 2.08 | 13.10 | 0.44 | 0.28 |
| Bank of India | 321.10 | 588.00 | 316.35 | 71.30 | 1.38 | 1.06 | 7.69 | 1.29 | 2.18 | 11.57 | 1.27 | 0.15 |
| Bank of Maha | 51.05 | 84.95 | 48.25 | 70.13 | 1.56 | 0.80 | 7.36 | 0.85 | 3.92 | 12.59 | 1.15 | 0.17 |
| Canara Bank | 431.25 | 844.00 | 405.45 | 72.27 | 1.33 | 1.02 | 5.11 | 1.04 | 2.55 | 13.37 | 1.34 | 0.22 |
| Central Bank | 103.80 | 211.86 | 101.30 | 72.33 | 1.41 | 1.15 | 5.61 | 0.96 | 2.41 | 12.68 | 0.87 | 0.14 |
| Corporation Bank | 444.70 | 814.85 | 435.15 | 74.39 | 1.31 | 0.88 | 4.60 | 0.89 | 4.50 | 14.05 | 0.52 | 1.04 |
| Dena Bank | 80.85 | 151.00 | 77.20 | 69.82 | 1.41 | 0.74 | 4.21 | 0.78 | 2.72 | 13.14 | 1.08 | 0.24 |
| IDBI | 112 20 | 202 25 | 111 15 | 87 04 | 126 1.26 | 085 | 637 | 080 | 312 | 13 83 | 125 | 014 |
| Indian Bank | 211.85 | 316.50 | 197.00 | 71.12 | 1.59 | 1.09 | 5.19 | 1.10 | 3.54 | 13.03 | 0.51 | 0.33 |
| IOB | 119.00 | 176.35 | 116.15 | 77.00 | 1.42 | 0.85 | 6.83 | 0.98 | 4.20 | 13.38 | 1.08 | 0.11 |
| Oriental Bank | 316.15 | 545.00 | 280.00 | 68.97 | 1.39 | 0.87 | 6.17 | 0.76 | 3.29 | 13.64 | 1.09 | 0.22 |
| Punjab & Sind Bank | 82 65 | 149 70 | 81 50 | 71 39 | 130 1.30 | 063 | 350 | 000 | 242 | 13 34 | 077 | 009 |
| Punjab Natl.Bank | 1042.40 | 1395.00 | 971.00 | 77.38 | 1.60 | 1.56 | 7.39 | 1.48 | 2.11 | 12.40 | 0.86 | 0.29 |
| St Bk of India | 2174.85 | 3515.00 | 2123.00 | 81.03 | 1.67 | 2.07 | 19.92 | 1.74 | 1.38 | 11.60 | 1.61 | 0.13 |
| Syndicate Bank | 105.30 | 164.20 | 98.05 | 78.75 | 1.49 | 0.86 | 5.36 | 0.81 | 3.51 | 12.09 | 0.93 | 0.23 |
| UCO Bank | 71 70 | 152 35 | 71 35 | 68 19 | 131 | 083 | 479 | 084 | 418 | 13 51 | 215 | 019 |
| Union Bank (I) | 265.45 | 426.80 | 259.50 | 74.58 | 1.48 | 1.21 | 7.16 | 1.33 | 3.01 | 12.88 | 1.32 | 0.22 |
| United Bank of India | 82.30 | 152.20 | 81.50 | 68.73 | 1.45 | 0.77 | 5.17 | 0.25 | 2.67 | 13.23 | 1.67 | 0.15 |
| Vijaya Bank | 59.10 | 115.35 | 56.80 | 66.51 | 1.31 | 0.82 | 6.61 | 0.74 | 4.23 | 13.04 | 1.65 | 0.09 |
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