Canara, Indian Bank get Haitong Sec's 'Outperform'

Mumbai: Haitong Securities has initiated coverage on state-owned lenders Canara Bank and Indian Bank with 'outperform' ratings. The brokerage said among public sector banks, State Bank of India remains its top pick followed by Bank of Baroda.

"After being severely impacted during the previous corporate cycle, PSBs are gradually improving their asset quality," said Haitong's analysts Darpin Shah and Nikhil Vaishnav in a note to clients. "Further, these banks are more focused on better-rated corporates and granular loans, which provides some comfort on the asset quality here-on."

NSE's Nifty PSU Bank index surged almost 4% on Tuesday as against the 1% gain each in Bank Nifty and benchmark Nifty. Indian Bank, Punjab National Bank and Canara Bank jumped 5-6% each.


"While the restructured book remains slightly higher than comparable private peers, it remains lower than the previous cycle, which provides additional comfort," said the brokerage's analysts.