Buy selective PSU bank stocks, stay invested: Deven Choksey
One will have to remain selective in picking some of these banks. There is nothing wrong with these banks.
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| ET Now spoke to Deven Choksey, MD, KR Choksey Securities, on his views on PSU bank stocks.
What’s your call on the entire PSU banking lot? Would you bottom fish and perhaps pick some fundamentally strong stories at these levels? If so, which ones or would you completely avoid and let the froth settle down first?
No, one will have to remain selective in picking some of these banks. There is nothing wrong with these banks. Actually if you look at the entire banking sector and then exposure towards real estate, overall in the banking space it is 16%.
Now company to company, it would differ. Like SBI kind of a bank would have about 11% going towards housing sector and about 2-2.5% going towards commercial real estate sector. So from that point of view, they are even much below the industrial average of 16%, they are at around 13-13.5%.
So from that point of view, one should not be worrying too much about the real estate per se and at the same time, all real estate is not bad and probably the people have not only lock, stock and barrel given the funding to developing companies. They have given much bigger amount of funding to the actual users, the buyers of the premises.
From that point of view, the NPA situation also does not arise. In my viewpoint, these banks are available at a valuation, which is quite far comforting at this point of time. You cannot be wrong with SBI with around 2 times price-to-book value ratio. You cannot be wrong with IDBI Bank with around 1.2-1.3 times price-to-book value ratio, so from that point of view, I really feel that some of these banks can be picked up in the portfolio and stay invested with.
What’s your call on the entire PSU banking lot? Would you bottom fish and perhaps pick some fundamentally strong stories at these levels? If so, which ones or would you completely avoid and let the froth settle down first?
No, one will have to remain selective in picking some of these banks. There is nothing wrong with these banks. Actually if you look at the entire banking sector and then exposure towards real estate, overall in the banking space it is 16%.
Now company to company, it would differ. Like SBI kind of a bank would have about 11% going towards housing sector and about 2-2.5% going towards commercial real estate sector. So from that point of view, they are even much below the industrial average of 16%, they are at around 13-13.5%.
So from that point of view, one should not be worrying too much about the real estate per se and at the same time, all real estate is not bad and probably the people have not only lock, stock and barrel given the funding to developing companies. They have given much bigger amount of funding to the actual users, the buyers of the premises.
From that point of view, the NPA situation also does not arise. In my viewpoint, these banks are available at a valuation, which is quite far comforting at this point of time. You cannot be wrong with SBI with around 2 times price-to-book value ratio. You cannot be wrong with IDBI Bank with around 1.2-1.3 times price-to-book value ratio, so from that point of view, I really feel that some of these banks can be picked up in the portfolio and stay invested with.
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