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psu: Rerating cycle to extend into small PSU banks: Vinit Bolinjkar


“I believe the rerating of cycle in PSU banks will continue and within this, it will stretch to the smaller PSU banks. We are quite gung-ho on available at 0.9 times book FY24 earnings and this bank has got almost Rs 1,000 crore of over provisioning. We will see some very strong CAGR growth coming into this stock and we could see some good upside from current levels,” says Vinit Bolinjkar, Head of Research, Ventura Securities


What is your take on the entire PSU banking space? Is s large part of the rerating over or is this just the beginning of the curve?
PSU banks have been over capitalised and they were over-provided for. With the capex cycle turning around, GST collection also zoomed up and inflation is cooling off. The credit cycle is going to pick up and PSU banks are definitely going to benefit from this which is a secular offtake cycle. Compared to their richer cousins, which are the private banks, they are quoting at substantial discounts,

I believe the rerating of the cycle will continue and within this, it will stretch to the smaller PSU banks. We are quite gung-ho on Bank of Maharashtra available at 0.9 times book FY24 earnings and this bank has got almost Rs 1,000 crore of over provisioning. We will see some very strong CAGR growth coming into this stock and we could see some good upside from current levels.

Do you see a rotation play out within the auto pack? Year to date, M&M and have been the significant winners. Do you think time has now come to bet on a or a which have not performed as well?
We could bet on Maruti but we have to take two things into cognisance; one that volumes are still below the FY20 levels; year to date, when we compare year-on-year, and we would be looking for more triggers coming in.

In terms of sustenance of the festive season purchasing, I would like to wait for the November numbers to come in before taking a call on that. I definitely think that Maruti should be watched.

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Among the new age tech stocks, PolicyBazaar has been doing well. It is up 8.5% and despite liquidity pressure and that big block deal, managed to inch higher by around 4.5%. How should one approach this space?
Nykaa can be looked into on booking profits at higher levels. I expect prices to move up slightly higher because of the deal going through but sans any kind of cash flows coming through, I believe the stock will eventually come off. It is only a bear market rally.
As for PolicyBazaar, if they do not get their costs under control, then the stock will continue to see lower levels. We believe the stock can be held onto because they have got a very strong moat in terms of being the leader in discovery of insurance products and everyone goes to PolicyBazaar site to view the options that are available to them. We believe that they have a very strong revenue model in place and if they keep their costs under control, then the stock can start getting rerated on the buy side.



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