The recent surge in public sector banks (PSBs) has created a momentum play where they look more attractive to traders. The differences in valuations between private banks and PSBs have reduced. Most PSBs trade at low valuations, while many private banks trade at high valuations. That differential could reduce.
In most sectors, analysts examine the price-earnings (PE) ratio as a basic measure. But, in the banking sector, price-book value (P/BV) ratio is more useful. Bank profits can be distorted due to provisioning for non-performing assets — banks have latitude in this regard. ...
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First Published: Thu, November 02 2017. 23:50 IST
