Why Government Or PSU Bank Shares Are Good Buys At Current Levels?

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    It has been carnage in the last two weeks with investors selling stocks across the board. Metals and banking stock have seen severe drubbing in the last two weeks.

    Why Government Or PSU Bank Shares Are Good Buys At Current Levels?
    Among them the worst hit have been the PSU banking s[ace with share having fallen as much as 10-15 per cent.
     

    Some of these stocks certainly hold good value. For example, most of them are quoting way below book value and the dividend yields on some of these stocks is excellent. Yes, there are concerns on the nonperforming asset front, but, they are not expected to last forever.

    Let's take a look at some of the PSU banking stocks that are really good bets at the current levels.

    Syndicate Bank

    At a price to book value of just 0.53 times, Syndicate Bank is a very attractive stock. In terms of dividend yield the stock can easily give a return of 5-6 per cent, if it maintains the same dividend like last year.

    The one good thing about the share of Syndicate Bank is that the non performing assets have been very much under control. Unlike peers they are much better. The stock is trading at a price to eranings multiple of around 4 times. A super buy at the current level of Rs 99.

    Bank of India

    The shares of Bank of India on Friday have hit a 52-week low of Rs 191 on the Bombay Stock Exchange. The stock has fallen from a 52-week high level of Rs 380 to the current level of Rs 191. The price to book value is around 0.44 times. The book value of the stock is around 0.44 times. Should there be a sharp economic recovery, expect the non performing assets to fall and the stock of PSU banks to double from the current levels.

    Oriental Bank of Commerce

    Oriental Bank of Commerce is another stock that has a good potential for an upside from the current levels. The stock has moved down from levels of Rs 377 to the current levels of Rs 208. The sharp deterioration in the share price makes the stock attractive at the current levels, given the fact that it is quoting at 0.44 times its book value.

    Conclusion

     

    PSU banking stocks have fallen substantially in the last few years. Some of them are very attractive, if you consider that they are likely to declare dividends in the next few months. This makes them a good buy at the current levels.

    GoodReturns.in

    Story first published: Saturday, March 28, 2015, 9:27 [IST]
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