Bank of Baroda and UCO Bank stand out as winners from the banking pack: Prakash Diwan

In a chat with ET Now, Prakash Diwan, Director, Altamount Capital Management shares his views on the banking stocks.

ET Now: Is there a PSU bank fundamentally that looks good to you?

Prakash Diwan: I would differentiate between the large cap PSU banks and the midcap PSU banks because they have a different pattern of behaviour. Out of the large cap pack, it is BOB. It wins hand down. There is absolutely no question on why that so superior to PNB and SBI.

On the midcap space, I would still go with the UCO Bank. The price appreciation has still not been commensurately the same as for OBC, Allahabad, Indian Overseas, etc. There is enough head room for growth.

UCO Bank, on the lines of OBC, has been able to successfully sell a lot of its distressed assets to ARC or asset reconstruction companies.

In this turnaround, a lot of them have started getting exits which is very favourable for a bank. Part of the SARFAESI Act relies a lot on the exits from this asset reconstruction portfolio. This is why both these banks is benefited tremendously.

OBC has had a head start of sorts. UCO Bank should stand out as a winner from current levels ahead of the pack irrespective of how the market or the climate behaves for the banking pack as a whole.