According to Nilesh Parikh, associate director – wholesale capital markets, Edelweiss Financial Services in case the Q4 numbers are in line with the third quarter for state owned banks then it may not be that negative for them.
According to Edelweiss report there are key structural changes that are underway for the state owned banks (PSBs) – changes that are likely alter the landscape for them, so the house has increased its weightage on the large PSBs like Bank of Baroda and Punjab National Bank .
The house has a target price of Rs 274 for Bank of Barod a and Rs 279 for Punjab National Bank , a 50 percent upside over the next twelve months.
Structural changes in terms of governance and professionalism although small steps initiated by the government but would result in a big outcome, says Nilesh Parikh, associate director – wholesale capital markets, Edelweiss Financial Services.
According to Parikh even though the management of state owned banks have indicated a subdued fourth quarter, in case the numbers are in line with the third quarter then it would not be a further negative for them.
Meanwhile, the Sebi move of pricing formula on conversion from debt to equity is a positive move, says Parikh.
With regards to PSBs, the valuation is just a support for PSBs but it does come into play in case of midcap banks, says Parikh. Midcap banks according to him are trading at half the price to book value and the period of consolidation for them would be longer but still a 15-20% upside over next 12-months is justified.
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