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Last Updated : Dec 04, 2012 10:44 AM IST | Source: CNBC-TV18

Punjab & Sind Bank has target of Rs 100: Tater

Punjab & Sind Bank has target of Rs 100 from short-term perspective and at Rs 125 the stock would be fully priced, so almost 80-90 percent upside even from current levels, says Aashish Tater, Head of Research, Fortunewizard.com.


Punjab & Sind Bank has target of Rs 100 from short-term perspective and at Rs 125 the stock would be fully priced, so almost 80-90 percent upside even from current levels, says Aashish Tater, Head of Research, Fortunewizard.com.


Tater told CNBC-TV18, "We are looking at one particular ratio that is actually helping us to pick stocks which could be future outperformers in the banking sector. We picked Karnataka Bank on a rationale of price-to-book value and now it has rewarded with handsome returns of almost 60-70 percent in recent times."


He further added, "For Punjab and Sind Bank what we like is the per branch valuation given that maximum of its branches, almost 90 percent plus is not into Core Banking System (CBS) technology and still the bank has been able to do quite well given the fundamentals."


"Now with the bank actually going for a transformation and there would be lot of potential in days to come, we feel at a price-to-book value of 0.45 times I will not be able to find another stock from long-term perspective, because what we have actually studied is that even during tough times except for that 2008 recession the worst that the bank trades is at a an average of 0.7 times price-to-book value on doom days and on good situations where the fundamentals are actually supporting the midcap and small cap banks, they trade at roughly 0.95 price-to-book value."


"There is lot of potential when I see this particular stock at Rs 65-70 zone given that the book value is roughly around 


Rs 140. But what is also interesting us is that the way the NPA has shaped out for this particular bank, we feel the worst is almost over for banks like United Bank, Vijaya Bank and also Punjab and Sind Bank."


"If you see from this angle the very first thing that is comforting us is the valuation on downside which will definitely be protected. Secondly, there is hardly any free float left into the market. 78 percent is owned by President of India because it is a PSU, 8.5 percent is owned by three large institutions including LIC and 4-5 percent of the total float is controlled by strong hands, because the way our projectors are working on it we are working with a target of Rs 100 from short-term perspective and we feel at Rs 125 the stock would be fully priced, so almost 80-90 percent upside even from current levels. We feel someone who has a horizon of a year or so they will be handsomely rewarded from current levels with limited downside."


Disclosure: Safe to assume the stock discussed has been recommended to clients.



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First Published on Dec 4, 2012 10:22 am
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