PSU bank stocks: 10 multibaggers in 5 years of Modi government
PSU banks has delivered multibagger returns going up to 472% to investors in Prime Minister Narendra Modi's second term. Ten out of 12 PSU bank stocks have more than doubled investor wealth during the period.
According to data from Ace Equity, Indian Overseas Bank was the top performer among PSU banks, delivering 472% returns during the Modi 2.0 tenure. Bank of Maharashtra and UCO Bank followed, with returns of 325% and 226%, respectively. Additionally, Central Bank of India, State Bank of India (SBI), Indian Bank, Canara Bank, Punjab & Sind Bank, Union Bank of India, and Bank of Baroda provided returns ranging from 106% to 150% over the last five years.
However, two PSU bank stocks, Punjab National Bank and Bank of India, managed only 52% and 44% returns, respectively, in the given period.
Despite the stellar returns PSU banks have given in the last couple of years, the sector can still outperform their private peers, says Hardick Bora, Co-Fund Manager at Union Mutual Fund.
«We note that, on average, the return on equity of PSU banks is in line with their private counterparts. However, the valuations are at a 40-50% discount. We believe that for this valuation gap to converge, PSU banks will have to grow at par with private banks while maintaining the current low credit cost,» he says.
Meanwhile, a special interest this election season is in "Modi stocks," which have gained an average of 50% in the last 6 months. These are stocks of companies or sectors that have benefited directly from government policies
