Improving performance of banks was cited by Kotak Equities to express hope in stocks of regional cooperative and public sector banks. For Bank of Baroda, Canara Bank, Punjab National Bank, Union Bank of India, and Karur Vysya Bank, the brokerage firm has increased fair price and target price, since they made more money along with lower credit costs.
Profits were also buoyed by higher than expected growth in loan demand, and return on investment has been higher for the past few years. Despite being hit hard by the NPA cycle of corporates, these public sector banks have made a strong comeback and improved their asset quality ratio.
It also told agencies that an asset bubble will soon be seen in the corporate and real estate spaces, since they can trigger a sharp slowdown and high losses.
