2 PSU Bank Stocks Trading From Rs 400-650 Recommended As Buy In 2024; 21-25% Surge In 18-10 Months

Two public sector banks in the combination of mid-to-large caps are among the top picks for 2024. These stocks are trading in the range of Rs 400 to Rs 650, and are expected to rise by 20% to 25% respectively in the next 8-10 months. As per SMC Global Securities, while India nears macroeconomic stability in 2023, the volatility in the market will continue to stay. It is expected that India will remain a high-growth leader in 2024, with projections between 6.4% and 7%.

The brokerage believes this engine should fuel corporate profits and market performance. Speaking of India's inflation, it is expected to cool down and stay within the RBI's target.

"We may see the RBI start easing in 2024, further boosting liquidity and investor sentiment. According to the RBI bulletin, global growth may slow further in 2024, while disinflation at varying paces in different geographies may pave the way for interest rate reductions," SMC's note said.

That being said, banks will have a major impact on RBI rate cuts in 2024. SMC has recommended buying on SBI and Indian Bank share prices. Here's what the brokerage said:

State Bank Of India (SBI): (TP: Rs 791, CMP: Rs 636.65, Potential Upside: 24.24%)

The largest PSU lender in terms of market share, SBI has exhibited healthy performance on various parameters with some parameters showing way better than industry performance and some showing in line with the industry performance. The strong underwriting practices have led to significant improvement in the asset quality of the bank.

Also, SBI's management plans to double its home loan portfolio in the next five years.

SMC's note said, "To achieve its target of doubling the home loan book, the bank is strengthening its underwriting capability to improve delivery. Thus, it is expected that the stock will see a price target of Rs.791 in an 8 to 10 months time frame on 2-year average P/BVx of 1.73x and FY25 BVPS (Book Value Per Share).

Among the risk factors for the stock will be unidentified asset slippages and regulatory provisioning on assets.

SBI is an Indian multinational, public sector banking and financial services statutory body. As of 31 September 2023, the Government of India held a 57.49% stake in the bank.

YTD, SBI's upside is in the single-digit of 5% on BSE. Hence, a double-digit potential upside is likely in the next few months.

Indian Bank: (TP: 497, CMP: Rs 412.10, Potential Upside: 20.60%).

This leading PSU bank reported improvement in its asset qualities along with healthy growth in advances and deposits. Its focus on digital banking will continue to support the business growth going forward. It is strategically expanding the business and its major thrust would be on retail, agriculture, and MSME sectors, targeting 10-12% credit growth in FY24.

Thus, it is expected that the stock will see a price target of Rs.497 in 8 to 10 months time frame on a current P/BV of 1.08x and FY25 (E) BVPS,

Among the risk factors for the stock will be economic slowdown and deterioration in asset quality.

Indian Bank has 5819 domestic branches including 3 Digital Banking Units (DBUs), out of which 1974 are Rural, 1522 are Semi-Urban, 1174 are Urban & 1149 are in Metro category. The Bank has 3 overseas branches and 1 IFSC Banking Unit (IBU).

YTD, Indian Bank share price has rallied by over 39% on BSE.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or 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.