PSB Privatisation - BoM has an edge over PSB

By Research Desk
about 28 days ago

Punjab & Sind Bank (PSB) has declared its Q4 FY21 numbers, which can only be termed as disappointing, on all fronts, and looks typical of a PSB numbers. OP declined to Rs. 174 cr from Rs. 430 cr, YoY, with Net Loss for FY 21 at huge Rs. 2,733 cr, against Rs. 991 cr of FY20. NNPA rose to 4.04% at end of Q4, from 2.84% of Q3. Corporate & Retail Banking segements, both had negative profits, which was in positive QoQ, as well as YoY. 

Conversely, Bank of Maharashtra (BoM) had declared its Q4 FY21 numbers, which were better, cheerful and seen rewarding on all fronts, while looks typical of a Private Sector Bank number. OP rose to Rs. 1,540 cr from Rs. 595 cr, YoY, with Net Profit for FY 21 at huge Rs.550  cr, against PAT of Rs. 389 cr of FY20. NNPA fell to 2.48% at end of Q4, from 2.59% of Q3. Corporate Banking segement posted positive profit of Rs. 92 cr , which was in negative QoQ, as well as YoY.  Reatil Banking segment showed losses due to higher provisions.

We were seeing both banks, neck to neck, for getting early selction as PSB for privatisation. But seeing Q4 and FY 21 numbers of both banks, any prospective buyer would be keen buyer of BoM and not pof PSB, given choice. Even M cap of   Rs. 16.5k cr, with GoI holding 93% stake in BoM will fetch higher amount, against PSB having M cap of Rs.8.5k with GoI holding 97%, on privatisation.

So, if we start eliminating, BoM is seen on Pole position, as of now, to get privatised.
But Media and vested interests will start misguiding retail investors, that Govt will get rid of loss making bank.
Investors' caution and wisdom is warranted here as well.  

This is not a buy or sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.

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