PSU banks offer better opportunity for outsized absolute returns in next 1-2 years: Anshul Saigal

economictimes.indiatimes.com:

Anshul Saigal, Founder, Saigal Capital, says While public sector banks trade at about 1 to 1.5 times book on price to earnings basis, 5 to 10 times price to earnings, on a ROE basis, the outlook over the next one to two years for PSBs will be 15-16%, which is where the private sector banks are as well. With 15-20% earnings growth, private sector banks are in a similar range. Now, if valuations are materially attractive as compared to private sector banks, then in absolute return terms, PSU banks should deliver better returns as compared to private sector banks. Of course, if you want to prevent downsides and volatility, then the larger private sector banks are the place to hide.

What is your take on VIP if you have been tracking this one and then Safari in comparison as a peer? Any view here?
Anshul Saigal: In this space, what really played out is that the Safari business was an offshoot of VIP. The gentleman who used to run VIP, quit and started his own firm. And given that he had so much understanding of the business, he has been able to do a commendable job in building Safari. On the other hand, in the incumbent company, there have been issues on consistency of management as also on continuity of business and that has led to some amount of market share having moved to the new company and this space overall has so much room to grow that it has room for everyone to grow, except that VIP has been a little bit of a laggard in managerial issues.

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