PSB stocks have an inherent value not yet recognised fully: Prateek Agarwal

Prateek Agarwal, Head Equities, Bharti AXA Invest Manager gives his take on PSU stocks in the banking space, in a chat with ET Now.

Purely on the banking space we have seen that there is a major divergence in terms of the private banks and the PSU lot which certainly have seen a better dividend yield. Also, the book value is high. Do you think that there is inherent value in most of the PSU banking stocks which one has just not recognised as yet?

Prateek Agarwal: I think so. It’s just that when yields threaten to move up people move more towards the private sector. So these things move in cycles, sometimes PSU, sometimes private, sometimes it’s to do with fundraising and the valuation post fund raising and so on and so forth.

But as of now, PSUs do present a very significant amount of value to the market over time. Definitely the valuation gap between PSUs and private sector should come down. Already in various businesses PSUs are very very competitive versus the private sector, and in terms of the service offerings, you can feel they have gotten there.