PSU Bank Stocks Continue to Rally: Strong Credit Growth, Lower Valuations, and Asset Quality Improvement Key Drivers
Public sector bank (PSU) stocks continued to rally on September 18, 2023, with the Nifty PSU Bank index recording a gain of 4%, extending its rally to the 10th session in the last 12 days. Indian Overseas Bank led the gains, surging 20%, while Punjab & Sind Bank, UCO Bank, and Central Bank of India also rose sharply by 13-16%.
The rally in PSU bank stocks is being driven by a number of factors, including:
- Strong credit growth: Credit growth for scheduled commercial banks (SCBs) surged 15% as of March 2023, from 8.6% a year back. This is attributed to the pent-up demand factor as the normalisation of economic activity gained pace.
- Relatively lower valuations: PSU bank stocks are still trading at relatively lower valuations compared to their private sector peers. This offers investors an attractive opportunity to invest in these stocks.
- Commendable work on asset quality front: PSBs have made significant progress in improving their asset quality in recent years. The GNPA ratio of SCBs is likely to improve to 4.9% in September 2023 from 5% in September 2022.
Overall, the outlook for PSU bank stocks remains positive. Analysts expect further gains in the coming months, supported by strong credit growth, lower valuations, and improvement in asset quality.
- 22 Sep
NBCC shares trade higher on Rs 100 crore work order from SAIL
NBCC shares were trading 3 percent higher on September 22 after the company announced having bagged a work order worth Rs 100 crore from SAIL. This is the fourth order-win announced by the company in this month, the total value of the same being Rs 450 crore. NBCC is a public sector undertaking engaged in the business of construction and real estate development. The company specializes in providing project management, consultancy and engineering services for civil construction, infrastructure development, and real estate projects.
- 22 Sep
Glenmark Pharma stock falls on stake sale in Glenmark Life Sciences
Glenmark Pharma stock fell after the company announced it would sell a 75% stake in its subsidiary Glenmark Life Sciences to Nirma. Analysts expect the stake sale to benefit Glenmark Pharma, as it will transition from a net debt position to a cash surplus position. This is expected to have a positive impact on the company's return ratios over the next two to three years.
- 22 Sep
Berger Paints Shares Hit 52-Week High After Turning Ex-Bonus
Berger Paints shares surged 6% to hit a 52-week high after turning ex-bonus on the record date for the issue of bonus shares in the ratio 1:5. The company posted a net profit of Rs 326.3 crore in the April-June quarter of FY24, up 39% year-on-year, on revenue of Rs 2,739.7 crore, up 10% year-on-year. The company expects to get net cash positive by the end of this fiscal year and expects to end the year with double-digit revenue growth on strong demand outlook.
- 22 Sep
Market Update for September 22, 2023
IdeaForge Tech up 3.4% on order RVNL up 3% on highway MoU JSW Steel up 0.4% on sale ICICI Lombard down 1.6% on CEO exit ICICI Bank down 1% on healthcare investment NHPC up 1.3% on extended additional charge Kalyani Forge up 3.2% on new MD IRB Infra up 2.5% on road project closure
- 22 Sep
Lux Industries Shares Down 3% After Income Tax Raid
Lux Industries shares fell 3% on September 22 after news emerged that the Income Tax department had conducted searches at the company's premises in Kolkata and alleged a tax evasion of Rs 200 crore. The company has confirmed the searches and is extending full support.