Lancelot D'Cunha, CEO, Sharyans Wealth Management advice investors to buy UCO Bank at current levels.
D'Cunha told CNBC-TV18, "I am looking at UCO Bank which I feel because of the interest rates scenario. You have seen the interest rates may come off over a period of time and that will result in some amount of re-rating on the banks and UCO Bank has really fallen substantially. It is presently trading at almost half times its book value on concerns that they were a large amount of state electricity board loans but that seems to be around Rs 6,000 crores and of which they really won't have substantial provisions. The bank is fairly well managed in terms of its net interest margins is about 2.2% NIMS."
He further added, "It has an NPA ratio of 1.8%. Its capital adequacy is fairly good, it is about 13.97%. Considering the overall valuations this really looks to be an attractive stock especially if you are willing to hold on for about a year or so because as the interest rate scenario eases up, as we expect over the next 12 to 18 months these banks will get re-rated in terms of valuation and I have a target price of Rs 74 on the stock. I think this is a good opportunity to get into the banking sector."
Disclosures: Myself and my clients have investments in all these three companies.
