2 PSU Bank Stocks Are Hot, LKP Securities Sees 28-37% Rise In 3-6 Months: Who Are They?

Two public sector banks are among the top picks of LKP Securities as India lays the foundation for Amrit Kaal. LKP believes PSU companies would start winning both - Heart and Mind of domestic investors. These two stocks are Bank of Baroda and Canara Bank expected to rise by a whopping 37% and 28% in the next three to six months.

From last year's Independence Day to the 77th Independence Day, Bank of Baroda's stock price has rallied by over 55% on BSE, while Canara Bank shares have jumped by at least 42%.

On August 14, 2023, BoB shares stood at Rs 188.85 apiece down by 2% on BSE, while Canara Bank shares settled at Rs 329.50 apiece lower by 0.8%.

Both are among the leading PSU banks. Here's what LKP Securities highlighted about the two stocks:

Bank of Baroda:

In its note, LKP Securities said, " We pick BOB to play the PSU banking theme due to its strong growth in both Advances and deposits on the back of a healthy liquidity position and attractive valuations." It highlighted that lower slippages and improving asset quality with higher provision coverage give us confidence in the bank's ability to leverage its strong customer franchise and reach.

A granular liability profile coupled with competitive cost of funds should in LKP's view help the bank going forward. Loan growth guidance of 15% this fiscal and NNPA guidance of 0.75% provides comfort.

In its technical commentary, LKP said, "Bank of Baroda has been moving with a higher top higher bottom
formation on the weekly chart." Besides, it has been sustaining above the 50 EMA on the weekly timeframe. Additionally, the price is trading above the previous consolidation.

On the higher end, the brokerage expects Bank of Baroda shares likely to move towards 250/265. Support is placed at 174.

The buying range in the bank's stock is in the range of Rs 190 - 193 for the target price of Rs 250/265. The duration for the target price is set for the next 3 to 6 months. Hence, Bank of Baroda stock is expected to rise by 37%.

Canara Bank:

According to the brokerage, Canara Bank has been moving with a higher top higher bottom formation on the weekly chart. Also, the stock has been sustaining above a critical moving average on the weekly timeframe. Additionally, the price is trading above the previous consolidation.

Thereby, LKP expects the stock to likely move towards 400/430 on the higher end. Support level is set at Rs 300.

Hence, LKP recommends buying in Canara Bank in the range of Rs 328 - 336 for a target price of Rs 400 / 430. This indicates a potential upside of up to 28% in 3-6 months.

Canara Bank has been posting consistent growth since the last 12 quarters with improvement in Asset Quality and should be able to bring down credit cost to a shade over 1% this fiscal. Its huge Loan Book should in LKP's view grow at a CAGR of 15% going forward led by RAM & Corporate Book.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.