3 Large Cap PSU Banking Stocks Can Give Up To 44% Return, Buy, Says Top Broking Firms

Here are 3 large cap Public Sector Banks (PSBs) or PSU bank stocks on which leading broking firms are bullish. Motilal Oswal, Axis Securities, and Sharekhan have assigned a "Buy" on the stocks of State Bank Of India, Bank of Baroda, and Punjab National Bank with an attractive target price for gains up to 44%. Check below to know more:

State Bank Of India (SBI)

SBI is among the Top Picks in March 2023 by Axis Securities. The brokerage has assigned a "Buy" on the SBI with a target price of Rs 750/share. It claims 38% potential return.

The last traded share price of SBI is Rs 547.35 apiece, down 2.07%. It gained 16.78% in 1 year. It gave 115.96% multibagger return in 3 years, whereas, in 5 years it gave 116.13% positive return..

Brokerage's Comments

According to Axis Securities, Among PSU banks, SBI remains the best play on the gradual recovery of the Indian economy on account of its healthy PCR, robust capitalization, strong liability franchise, and improved asset quality outlook.

"We believe normalization in credit costs and improved growth outlook should lead to double-digit ROEs of ~16.5% over FY23-25E. We maintain our BUY rating on the stock with a target price of Rs 750/share (core book at 1.4x FY24E and subsidiaries at Rs 190)," the brokerage has said.

Bank of Baroda (BoB)

Motilal Oswal has assigned "Buy" on BoB with a target price of Rs 240/share. According to the given target price, the stock can give up to 44% return.

The last traded share price of BoB is Rs 167.80 apiece, down 2.19%. It gave a positive return of 64.75% in 1 year, 141.96% in 3 years, and 27.56% in 5 years, respectively.

Brokerage's Comments

According to Motilal Oswal, BoB is well capitalized to capture incremental growth opportunities, mainly led by retail loans. Meanwhile, the corporate book has been witnessing a healthy recovery, resulting in a gradual pickup in loan growth. Healthy NII growth and a pickup in other income should boost earnings, while margins should remain buoyant after a strong expansion to 3.4% in 3QFY23.

It added, The CASA mix has moderated after higher growth in term deposits (mainly bulk deposits). Asset quality continues to improve with NNPA at less than 1%. A lower SMA book and controlled restructuring provide further comfort on asset quality. We estimate FY25 RoA/RoE of 1.1%/15.3% and value the stock at INR240 (1.1x Sep'24E ABV). We have a Buy rating on the stock."

Punjab National Bank (PNB)

Brokerage firm Sharekhan has assigned a "Buy" to PNB with a target price of Rs 64 apiece. If you buy the stock at the current market price, it can fetch gains up to 29%.

The stock of PNB last traded at Rs 49.90 apiece, down 1.96%. It has given positive returns of 38.8% in 1 year and 25.53% in 3 years, respectively. However, it declined 47.8% in 5 years.

Brokerage's Comments

Sharekhan said, "We remain positive on PNB as the bank is likely to deliver strong earnings driven by healthy PPoP growth and normalisation of credit costs. We expect Avg. RoAs of 0.8% driving Avg. RoE (return on equity) of 11% over FY24- 25E going ahead. We believe valuations are cheap for PNB as compared to an improvement in return ratio profile expected going ahead. An improvement in Core RoA trajectory of the bank is expected to drive strong outperformance in near to medium term."

It added, "We believe correction in the stock seems to be overdone due to Adani-Hindenburg saga and provides good opportunity to add due to improving business outlook. The stock currently trades at 0.6x/0.5x its FY2024E/25E ABV. We reiterate our Buy rating on the stock with an unchanged PT of Rs. 64."

Disclaimer

The stocks have been picked from the brokerage reports. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.