State-owned lender Punjab & Sind Bank has recently experienced a spectacular upmove and doubled investors' money in just nine sessions. In the past nine trading sessions, the share price of the PSU bank has surged from ₹20.8 to ₹40.9, delivering 97% return in this period. In comparison, the BSE Sensex has fallen 1%, while the BSE Bankex index has risen 1.2% during the same period.
Continuing its gaining streak for the fourth straight session, Punjab & Sind Bank share price opened 4% higher at ₹38.75, against the previous closing price of ₹37.2 on the BSE. Extending opening gains, the banking stock locked in a 10% upper circuit at ₹40.9, hitting its fresh 52-week high on the BSE. With a market capitalisation of ₹27,721 crore, the midcap stock has zoomed 227% in the past six months, from its 52-week low of ₹12.50 on June 21, 2022.
Punjab & Sind Bank share price has surged 122% in a month as compared to 3.7% rise in the banking index, S&P BSE Bankex, and 2.9% growth in S&P BSE Midcap. In the past three months, the multibagger stock has risen 149%, while it has gained 153% in the calendar year 2022 and 136% in the last one year. In the long term, the stock has delivered negative returns of 2.7% and 5.7% in three years and five years, respectively. In contrast, the S&P BSE Bankex has climbed 11.9% in three years and 13.4% in five years.
The price-to-earnings (P/E) ratio of Punjab & Sind Bank is 22.32, which is much higher as compared to the peer median of 14.16. A high PE ratio indicates that a stock is expensive and its price may fall in the future.
Public sector banks (PSBs) have witnessed a strong rally this month, with Bank of Baroda and Bank of India hitting their 52-week highs and index heavyweight State Bank of India (SBI) hovering around its record high after Morgan Stanley raised price targets of these PSU banks, expecting sustained growth in both operational and stock performance terms.
"Over the past two years, Indian banks have seen sharp moderation in new NPL (Non-Performing Loan) formation, which, coupled with increased NPL coverage during COVID, has resulted in sharp moderation in credit costs. In recent quarters, this has been followed by sharp improvement in margins, helped by a rising rate cycle - higher rates, coupled with retail funded balance sheets and higher shares of repo-linked loans, have led to up-front margin expansion in the current cycle. Loan books have yet to be fully repriced, which implies that margins might expand further before, then moderate in F24," the global brokerage said in its latest report.
The global research firm affirmed its ‘overweight’ rating on Bank of India, Bank of Baroda, and SBI; ‘equal-weight’ rating on PNB; and ‘underweight’ rating on Canara Bank. It raised the target price for Bank of India to ₹125 from the existing ₹95. For Bank of Baroda, the price target was hiked to ₹220 from ₹195 estimated earlier. Similarly, the price target for PNB revised upward to ₹60 from ₹40, and ₹345 from ₹280 for Canara Bank. The target price for SBI was upgraded to ₹715, an upside potential of 15% from the current market price.
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