Moneycontrol BureauNomura has upgraded PNB to buy with a target price of Rs 120 per share stating that adjusted valuations look reasonable. It says that PNB is almost through with stress recognition.
The brokerage firm has a buy rating on State Bank of India with a target price of Rs 250 per share. SBI remains to be preferred corporate bank pick for Nomura.
Nomura has a buy rating on YES Bank (target price of Rs 1300) and ICICI Bank (target price of Rs 285). It has a neutral rating on Bank of Baroda with a target price of Rs 285 per share. Cleaber book and better non-performing asset (NPA) recognitin works in favour for the stock.
The brokerage firm says that corporate banks have either recognised a large part of their stressed assets as non-performing assets (NPAs) in H2FY16 or have declared a large watchlist. "Our detailed analysis of a breakdown of the stressed assets of banks gives us a conviction that we are nearing the peak in NPAs, especially for PSUs, as 30-50 percent of their exposure in stressed sectors have been either marked as NPAs or restructured. Near-term return on equity (ROEs) will remain constrained due to provisioning, but we expect large PSU banks to record 12-14 percent adjusted ROEs by FY18-19, and hence find the current valuations reasonable," it says in a report.
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