Maintain BUY on SBI and BoB in PSU Bank space: Daljeet Singh Kohli, Head of Research, IndiaNivesh Ltd

In an interview with ET Now, Daljeet Singh Kohli, Head of Research, IndiaNivesh Ltd, shares his views on markets. Excerpts:

ET Now: When it comes to the PSU banking block, the NPA worries are likely to linger and the earnings going into the coming quarters are not going to see any respite whatsoever, your take?

Daljeet Singh Kohli: Yes, earnings will take lot more time to revive than what people believe. Most of the analysts have been expecting that we are at the end of NPA worries for four or five quarters, but that seems to be going on forever. These quarter numbers were also no good. There have been fresh slippages. There have been more restructuring to take advantage of forbearance period, but the quality of assets is very bad, especially PSU banks are all stuck with that.

So, I do think there is some improvement there. On top of it, you do not have credit offtake, so your growth is also hampered. They are facing double trouble. Therefore, PSU banks have to be very selective. However, we are still continuing with our buy rating on PSU banks. One is SBI and the other one is BOB. What we believe is that perhaps they have seen very large chunk of restructuring and bad assets already came out.

From here onwards, incrementally, there may be retardation in that and therefore once the revival comes they will be the first ones to bounce back. Therefore we maintain a buy rating on SBI and BOB and also we feel that lot of cleaning up has already happened.