homemarket NewsBofA Securities upgrades SBI, revises target price of other PSU banks after Q3 results
BofA Securities upgrades SBI, revises target price of other PSU banks after Q3 results
BofA Securities upgraded SBI to ‘neutral’ with a target price of ₹800 per share from ₹690 earlier. It upgraded Bank of India, and revised the target price for Canara Bank and PNB.
Brokerage firm BofA Securities has upgraded State Bank of India (SBI) and Bank of India (BoI), and revised the target prices of Canara Bank, and Punjab National Bank (PNB). BofA made the revisions as the third quarter of the financial year (Q3FY24) earnings beat estimates.
BofA upgraded SBI to ‘neutral’ revising the target price upward to ₹800 per share from ₹690, implying a potential upside of 5% from Thursday’s (February 15) close.
BoI has been upgraded to ‘buy’ with a target price of ₹300 per share versus ₹275 earlier, implying a potential upside of 110% from the current market price.
The brokerage retained a ‘buy’ rating on Canara Bank but raised the target price to ₹660 per share from ₹540 earlier, reflecting a potential upside of about 3% from the current price in the next 12 months.
It also maintained 'underperform' on India’s second largest PSU lender PNB with a target price of ₹90 per share, anticipating a potential downside of 30% from the current price, over the next 12 months.
In its report, the brokerage said the earnings per share (EPS) estimate for the sector have been raised by 3-12% on the back of better loan growth and credit cost expectations.
It also noted that the price to book value (P/BV) ratio for all the PSU banks have now converged to 1x and all cyclical improvement have been priced in. The return on asset (RoA) looks sustainable at 1% plus.
There is room for foreign institutional investor positioning to rise as investors see proof of execution over 1-3 years, it observed.
In an interview with CNBC-TV18, Amish Shah, Head of India Research at BoFA Securities said there has been operational improvement within PSU banks and the broader PSU sector, suggesting that the rally in these stocks may continue.
Bank of India shares rose by more than 3% to hit a high of ₹149.70 on BSE after the BofA report. The stock was trading 2.42% higher at ₹146.3 per piece on BSE at 12:46 PM.
SBI shares were trading at ₹770.7 apiece, up 1.19%, on BSE while Canara Bank shares traded flat at 586.5 apiece, down 0.12%. PNB shares rose by 2.64% to trade at ₹132.2 apiece on BSE
(Edited by : Shweta Mungre)
First Published: Feb 16, 2024 3:51 PM IST
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