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Business News/ Markets / Stock Markets/  PSU banks continue winning streak for 3rd day in a row; Canara Bank, BoB, SBI reach new record highs
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PSU banks continue winning streak for 3rd day in a row; Canara Bank, BoB, SBI reach new record highs

PSU Banks resume winning streak with gains for the third consecutive session. All 12 constituents of the Nifty PSU Bank index finished today's trade in the green, with Bank of India and Punjab and Sind Bank leading the pack, gaining 5.8% and 5.3%, respectively.

The combined profit of 12 PSBs in Q3 FY24 jumped 3.84% to ₹30,297 crore as compared to ₹29,175 crore recorded in the same period last year.Premium
The combined profit of 12 PSBs in Q3 FY24 jumped 3.84% to 30,297 crore as compared to 29,175 crore recorded in the same period last year.

After a brief pause, PSU Banks resumed their winning streak, marking the third consecutive session of gains in Thursday's trading. All 12 constituents of the Nifty PSU Bank index finished today's trade in the green, with Bank of India and Punjab and Sind Bank leading the pack, gaining 5.8% and 5.3%, respectively. 

Canara Bank shares surged to a new record high of 594.7 each, marking a nearly 5% gain. The stock has been on a strong upward trend since the bank's Q3 result announcement on January 24. Today's rally has pushed the stock to gain a multi-bagger return of 104% in a year. 

Similarly, Bank of Baroda shares also touched a new record high of 277 apiece in today's session by gaining 3.50%. The bank also saw its shares grow steadily after the release of the Q3 numbers. 

Also Read: 13 Nifty 500 stocks priced under 100 have gained up to 425% in a year

During the last week of January, BoB shares jumped 12.40%, posting the biggest weekly jump since February 2021. In CY24 so far, it has zoomed 19%. 

State Bank of India (SBI) shares also gained 2.43% to register a new all-time high of 761.5 apiece in today's session. In its latest report, domestic brokerage firm Motilal Oswal retained its 'buy' call on the stock with a target price of 860 apiece. 

The brokerage highlights State Bank of India's consistently strong performance for the past few years, achieving new profitability milestones such as surpassing 500 billion in PAT in FY23.

"Opex has been elevated due to high wage and pension provisions affecting PPoP growth; however, we expect earnings to gain traction from FY25 onwards after this opex blip," said the brokerage. 

It said the bank NIMs have declined in recent quarters, and the management has guided for broadly stable margins going forward as the bank has levers in place (CD ratio, MCLR re-pricing) to mitigate the impact of the rising cost of deposits.

Also Read: TRF: This Tata group stock hits 13-year high, gained nearly 100% in 6 sessions

The asset quality performance remains strong with consistent improvements in headline asset quality ratios, while the restructured and SMA books remain under control at 0.5% and 12 basis points of loans, respectively, it added. 

It estimates credit costs to remain in control at 35–40 basis points, enabling a 22% earnings CAGR over FY24–26E. Therefore, it projects the bank to deliver a RoA and RoE of 1.1% and 19–20% over FY25–26.

Meanwhile, the Nifty PSU Bank index ended today's session with a gain of 3.27% at 7,160 points. Despite the RBI maintaining the status quo for the sixth consecutive time and offering no indication of further rate cuts, banking stocks continued their strong performance.

Also Read: Amid volatility, technical experts give this support and resistance levels for Nifty

Looking at the earnings of the PSU banks, 9 out of 12 reported positive net profit growth in Q3. The combined profit of 12 PSBs in Q3 FY24 jumped 3.84% to 30,297 crore as compared to 29,175 crore recorded in the same period last year.

For the first nine months of the current financial year, PSBs have earned a cumulative profit of 98,358 crore as compared to 70,166 crore in the year-ago period, an increase of 40.17%. In Q1 and Q2 of the current fiscal year, public sector banks earned a cumulative profit of about 34,418 crore and 33,643 crore, respectively. 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 15 Feb 2024, 03:02 PM IST
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