Valuations of Banking Stocks in India

Depth and breadth of private banking space has now increased. You see significantly large private banks. And the private sector is getting market share. I feel the valuation of PSU banks continue to trade at a discount.

People are talking of reforms in financial sector in general and banks in particular. Will that increase activity in PSU bank stocks?

We have to pay for the subsidies. There is no other way than through the capital receipts. The gap can’t be filled with revenue receipts. Capital receipts can come only via disinvestment.

But, disinvestment doesn’t necessarily mean selling off. It could be like the selling of 3G licence. It could be through public sector IPOs.

Business is booming as usual. Biggest consumption and raising per capita income means they are at slight premium to the indices. From business point of view, they will feel pangs of liquidity. We are little unsure if they can quote at the non-cyclical valuations they are quoting at this point, which shouldn’t be the case