Private banks can give faster gains: Mehta

Devang Mehta, Anand Rathi Financial Services is of the view that one can hold Union Bank buy the faster gains would be in private banks.

Mehta told CNBC-TV18, “PSU banks are still facing a lot of problems. Taking a guess on the NPA would be a hit or a miss nobody knows about what NPAs would come into the next 2-3 quarters. Also the capital adequacy of this PSU banks are around 8-9 percent whereas the private peers are having anywhere between 12 to 14 percent. Given the tough micro economic conditions the private banks are going to do well over the longer-term though they come under premium valuation at this point."

He further added, "We would still favour the top banks like ICICI Bank or IndusInd bank plus somebody else. There were some exposure in midcap banks like Karur Vysya Bank and ING Vysya – I would strongly prefer those. Regarding Union Bank the valuations were quite inexpensive. It is trading at 0.8 price to adjusted book one year forward. The investor can hold it but the faster gains would be in private banks.”