Three Musketeers: BoB, Canara, Union Bank's stocks rally on healthy results

by IANS |

Mumbai, Nov 8 (IANS) The stocks of PSU lenders Bank of Baroda, Canara Bank and Union Bank have lately been on a high as healthy results as well as acceleration in economic recovery attracted hoards of investors to these counters.

Besides, the banking sector as a whole has been in the limelight on the back of healthy quarterly results.

In terms of quarterly results, Canara Bank posted impressive Q2FY22 figures on the back of lower provisioning and improvement in asset quality. The bank's net profit rose to Rs 1,333 crore from Rs 444 crore on a year-on-year basis.

In Monday's trade, the bank's stock rose to Rs 244.25, up Rs 15.45 or 6.75 per cent from its previous close.

On its part, Union Bank's Q2FY22 profit after tax (PAT) rose 195 per cent on YoY basis to Rs 1,526 crore due to the one-off recovery from DHFL.

Its stock on Monday closed at Rs 53.75, up Rs 4.60 or 9.36 per cent from its previous close.

The healthy rise seen in Bank of Baroda's stock has been attributed to investors' expectations of solid Q2FY22 performance.

The operating profit of BoB has been growing on YoY basis, and its Q2 results are expected to be positive on account of base effect.

"PSU banks have delivered good numbers in Q2 with asset quality not deteriorating," Deepak Jasani, Retail Research Head, HDFC Securities, told IANS.

"Their apparent valuations are not expensive and in some of these stocks, F&O build up has been happening over the past few weeks," he added.

According to Vishal Balabhadruni, Senior Research Analyst, CapitalVia Global Research: "The banking sector has been in the limelight with quarterly results coming out and India Inc doing well as a whole. This is reinforcing investors' sentiments. A search for value buying in the BFSI space has started."

Ajit Kabi, Research Analyst at LKP Securities, said: "Bank of Baroda is going to announce the results on November 10. The street is positive about its quarterly performance like other banks.

"The valuation of most of the PSU banks (ex-SBI) are very inexpensive. Economic recovery, stable credit growth, improvement in asset quality, lower restructuring than anticipated are the main reasons for stock surge."

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