New Delhi: Recently, there has been a lot of debate on Public Sector Undertaking (PSU) Banks’ valuation as the stocks have rallied sharply in run-up to the recently concluded Lok Sabha Election 2024. There has been a growing concern about the valuation of public sector lenders in the country owing to the meteoric rise in share prices. Instead, people now are looking to invest in private sector banks as they think since their share prices didn’t rise as much, so, these are relatively cheaper. Putting all the speculations to rest, stock market expert, Arun Mantri, founder, Mantri Finmart, has still advocated investment in favour of the PSU Banks. According to him, the public lenders are still undervalued despite the meteoric rise in share prices.
Mantri’s conviction in PSU Banks stems from the fact that the Net Performing Assets (NPAs) of the state-owned lenders are currently at lower levels. He expects the NPAs to “remain the same in the coming quarters as well.” According to credit rating agency, Icra, the PSU Banks’ NPAs in FY24 was lower than that of the private peers. The credit rating agency has estimated FY24 NPAs of the public lenders at 1.3 per cent. While, the domestic agency has estimated it to be 2 per cent in case of private lenders.
Expert bullish on smaller PSU banks
So, when asked which public lenders should retail investors go for at current levels? Mantri advised retail investors to bet on “smaller PSUs” both for short term and long term perspective. He said, “The smaller PSUs may be best bets in the short term and may generate good returns even in the long term investment perspective.”
Now let’s see the smaller PSU Banks according to market capitalisation. Likes of Punjab & Sind Bank, Bank of Maharashtra, Central Bank of India are amongst the smaller lenders in the country. While, the biggies in this category are the likes of the State Bank of India, Punjab National Bank, Bank of Baroda.
Performance of PSU Banks in Last One Year
PSU Bank
LTP (Rs)
52W H (Rs)
52W L (Rs)
365 D % CHNG
07-Jun-2023
BANKINDIA
121.35
157.95
69.5
63.14
PSB
60.3
77.5
29.45
83.99
UNIONBANK
146.8
172.5
68
104.11
UCOBANK
57.05
70.65
26.1
107.47
SBIN
829.25
912
543.2
41.03
CENTRALBK
64.95
76.9
26.55
137.36
MAHABANK
66.8
73.5
26.8
119.6
PNB
125.15
142.9
49.7
140.81
INDIANB
535.2
632.7
275.35
88.47
CANBK
119
128.9
58.33
-61.93
IOB
67.1
83.75
23.7
168.13
BANKBARODA
270.7
299.7
182.65
44.47
Source: NSE
As far as private banks are considered, it’s not that all experts are against investing in this section of the market. CNI Research’s Kishor Ostwal has said that the government of India’s thrust towards infrastructure spending will benefit private banks in the long term. He expects share prices of private lenders to rise due to rise in infra spending. Although, he didn’t had any stock recommendations on this sector.
(Disclaimer: Stocks recommendations by experts or brokerages are their own and not those of the website or its management. We advise readers to check with certified experts before taking any investment decisions.)
PSU Bank stocks investment: Stock Market expert Arun Manri recommended buying shares of smaller PSU banks both for short term and long term perspective. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
