ET Now: SBI has had a dream run ever since the PSU bank recapitalisation was announced and now the set of numbers for Q2 has come in. Do you think there is a case of rerating SBI stock?
Neeraj Deewan: As far as rerating is concerned, PSU banks have already got rerated. The rally we have seen in SBI, took it from Rs 260 to Rs 330. The second quarter results also show that at least on asset quality front, things are looking much better with a quarter-on-quarter fall in stressed assets from 26000 to 9000 additions, That is also a very welcome number. Plus, even provision coverage ratio is very strong at 65%.
The only one thing which I still am a little worried about as far as the numbers are concerned is that with the provision coverage ratio going up and extra provision that has been done, maybe there are still some more assets which they are considering that can get added to that stressed assets list that is why the provision coverage ratio is so high.
There is only a little worry but otherwise purely on these numbers, the kind of moves the bank saw yesterday was justified. I feel that after the run up that we have already seen in PSU banks, one can stay invested in PSU banks because the next year-and-a-half, capital is going to flow into them. There is also going to be some credit growth picking up. Those positive things that will help the economy pick up, will also help the PSU banks. But for traders, a short-term move may have been over and one may not get too much of an upside immediately in most of the PSU banks.
ET Now: There is mighty amount of excitement about Axis Bank, When the announcement was made that the board is going to be meeting and are looking at raising a large amount. Bain Capital’s name was being talked about and it has indeed come true. What next for the stock then because it is almost seems like Axis Bank is an Arvind kind of story which is buy on rumours and sell on news? Do you think it is going to excite the stock markets even on Monday?
Neeraj Deewan: Maybe some follow up may happen but the stock has also moved up since this news came that they are going to raise this capital. But the results this time were really bad. So people are worried about how much of this money will really go for growth and how much will be utilised to clear up the mess. Once the run-up has happened, you may see some follow up on Monday but I do not see too much of a move happening on the Axis Bank from these levels.
There are better options in the market which people will be looking at, with competition coming in from PSU banks and the kind of rerating that has happened on ICICI Bank looks interesting. The kind of move that we have already seen in Axis does not leave too much scope for a really good move from these levels.