50% banking stocks quoting below their book value

RELATED NEWS Bankers expect RBI to hike rates by 25 bps: CNBC-TV18 Poll Expect 1% rise in rates in 15 months: ICICI Bank Mkt prepared for 6% base repo rate: Kotak Mahindra Bank State B Bikaner BSE | NSE 30/05/12 Are Mutual Funds betting on State B Bikaner? Other Stocks in this news Bank Of Baroda | Corporation Bank | IDBI Bank | Jammu and Kashmir Bank | Karnataka Bank | City Union Bank | Bank of Rajasthan | HDFC Bank | Bank Of India | Oriental Bank of Commerce | State Bank of Travancore | Vijaya Bank | Allahabad Bank | UCO Bank | Bank of Maharashtra | Dena Bank |

18 banks belonging to both the public and private sector out of 37 are trading below their book value and are considered as good value buys by analysts.

 

Rising interest rates impacting their net interest income and investment portfolios, and regulatory interference compelling banks to buy un-remunerative bonds are reasons behind markets turning bearish on them they say.

 

Out of these 18, 67% or 12 banks belong to the public sector indicating a strong market aversion towards PSU banks. The remaining 6 belong to the private sector. Markets seemed to have hammered these banking stocks out of shape, as Indian interest rates, taking global cues, were on an ascent in the recent past.

 

Interestingly, these very stocks led the beginning of the bull run that began three years back, points out Sumeet Rohra of Antique Stock Broking.

 

However, things may change tomorrow when the RBI Governor Yaga Venugopal Reddy announces his credit policy tomorrow. Considering a strong rebound in the BSE Bankex today analysts believe that the governor may not go in for a rate hike tomorrow. The BSE Bankex -a sectoral index tracking the banking sector - gained 4.83% outperforming the BSE Sensex by a factor of 3.8.

 

"RBI governor may not go in for a rate hike tomorrow. He'd rather wait for a cue from the US Fed before taking a call. The expectation that a rate hike may not come is helping banking stocks gain some ground today," says Sailav Kaji, a banking analyst with domestic stock broking firm Pioneer Intermediaries.

 

In the PSU segment Bank of Maharashtra , Dena Bank , IDBI Bank , UCO Bank , OBC , Allahabad Bank , Bank of Baroda , State Bank of Bikaner , Bank of India , State Bank of Travancore , Vijaya Bank and Corporation Bank are all trading way below their book value.

 

PSU Banks	Price in Rs as on July 21		P/BV
	Bookvalue	BSE closing
Bank of Maharashtra	35.88	18.75	0.52
Dena Bank	37.15	20.75	0.56
IDBI Bank	88.03	51.45	0.58
UCO Bank	24.86	15.35	0.62
OBC	206.39	154.8	0.75
Allahabad Bank	68.27	55.25	0.81
BOB	213.79	186.35	0.87
St Bk of Bikaner	2811.32	2473.35	0.88
Bank of India	98.80	88.95	0.90
St Bk of Travancore	2663.30	2402.35	0.90
Vijaya Bank	37.37	33.75	0.90
Corporation Bank	235.28	216	0.92
Canara Bank	171.19	171.3	1.00
Andhra Bank	59.67	60.75	1.02
Syndicate Bank	50.53	51.9	1.03
Union Bank	81.02	85.8	1.06
PNB	287.79	314.85	1.09
Indian Overseas	56.08	76.15	1.36
SBI	525.25	716.05	1.36
St Bk of Mysore	2597.83	3767.5	1.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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