Indian Overseas Bank, Central Bank of India, Bank of Maharashtra, Bank of India
and Punjab & Sind Bank have seen their share price zooming between 53 per cent and 80 per cent during the week.
According to a report by news
agency Reuters, the government has shortlisted Bank of Maharashtra, Bank of India, Indian Overseas Bank, and the Central Bank of India
for privatisation in fiscal year 2021-22.
On February 1, Union Finance Minister Nirmala Sitharaman had announced big-ticket privatisation agenda of the government in the Budget 2021-22 which included selling two state-run banks, one general insurance company, seven major ports and the mega Life Insurance Corporation of India (LIC) public issue.
Meanwhile, most large Private Banks (PVBs) and Public Sector Banks (PSBs) reported better-than-expected asset-quality performance with contained non-performing assets (NPA) formation on pro forma basis in October-December quarter (Q3), while the restructuring pool (including the residual pipeline for Q4) too was lower vs. guidance, reducing the tail-end risk, analysts at Emkay Global Financial Services said in a report.
Most banks had largely done the heavy-lifting on provisioning well-= before Q3, and thus overall provisioning cost was moderate, leading to a healthy earnings beat. Factoring in better growth outlook on re-accelerating retail growth and asset quality with the big scare largely behind, the brokerage firm said it upgraded (Pre-result) FY22-23 earnings estimates for large PVBs by 6-30 per cent and PSBs by 14-60 per cent.
Analysts attribute the sharp rally in financial stocks, including the typically laggard PSBs, to improving economic/sectoral outlook on retail growth/asset quality and favorable budget proposals (kick-starting investment cycle, stress ARC for PSBs and privatisation of some PSBs), coupled with positive sector rotation/flows. The potential revival of capex/infra cycle could provide further legs to the growth story for banks, while NPA-light and reasonably capitalized residual PSBs emerging from the merger pain could partake in this growth, they say.