Public Sector Banks - Well Poised For Re-Rating 2.0: Motilal Oswal

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.Public sector banks have delivered a strong performance since FY22, with the Nifty PSU Bank Index outperforming the Nifty-50/Bank Nifty by 87%/ 78%. We earlier resumed coverage on the entire PSB sector in CY21 enthused by their improving business/earnings outlook. We estimate top six PSBs under our coverage to report profit after tax of Rs 1.5 trillion/Rs 1.7 trillion in FY25/FY26, while sector return on asset/return on equity improves to 1.2%/17.9% by FY26E. Several PSBs have raised capital from the market and have shored up their capitalisation levels, which will enable healthy balance sheet growth, particularly as the capex cycle recovers after the general elections. We thus estimate adjusted book value for our coverage PSBs to grow at a healthy 16-22% range over FY24-26. We believe that sustained and consistent performance on return ratios and a conducive macroenvironment can drive further re-rating of the sector. We introduce FY26E and rollforward target prices for our PSBs coverage universe. We thus revise our target price for State Bank of India (Rs 800), Bank of Baroda (Rs 280), Indian Bank (Rs 525), Union Bank of India (Rs 150), City Union Bank (Rs 550), Punjab National Bank (Rs 90). Top picks: SBI, BOB and City Union Bank..Click on the attachment to read the full report:.Government Cuts Windfall Tax On Crude, Diesel.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Public Sector Banks - Well Poised For Re-Rating 2.0: Motilal Oswal

1% RoA – from aspirational to sustainable; valuations remain attractive

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1% RoA – from aspirational to sustainable; valuations remain attractive

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