Canara Bank vs Union Bank: Which low PE PSU stock to buy today? Explained
Stocks to buy: In the aftermath of the recent downturn in the Indian stock market, many quality stocks, despite their strong fundamental and technical perspectives, experienced profit-booking. This situation presents an opportunity for investors, as these stocks are expected to generate alpha returns when the Indian stock market bottoms out.
Among these quality picks, shares of Union Bank of India and Canara Bank stand out as attractive from a valuation perspective. According to stock market experts, Canara Bank and Union Bank shares may look attractive from a valuation perspective, but in the wake of the high-interest rate regime peaking out, one needs to look at the CASA while choosing a bank stock.
They said that a lower cost of funding would enable a banking stock to deliver higher returns in the medium to long term as their fair value would be higher than their current market price. On choosing between Canara Bank and Union Bank shares, Saurabh Jain, Vice President — Research at SMC Global Securities, said, "From valuations perspective, both PSU bank shares look attractive.
The Union Bank delivered positive Q4 results in 2024, but their guidance was below the market expectations, leading to a downturn in Union Bank's share price. As the higher interest rate has peaked, the cost of funding has suddenly become an important factor when choosing a banking stock.
So, if we compare the CASA of these two banks, my choice would be Canara Bank shares, as its funding cost is lower than that of Union Bank. So, Canara Bank is expected to deliver more profitability in upcoming quarters." Also Read: Does rising India VIX mean rising tide against BJP's win in Lok Sabha Election? The SMC Global Securities expert said that Canara
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