Some of the most sought after bank stocks, including Kotak Mahindra Bank, HDFC Bank and IndusInd Bank, currently trade at forward PBVs of 3.6 to 3.8.
The stock performances of these companies will now largely be driven by key fundamentals.
According to numbers reported by the top ten PSBs during their December quarter, their collective loan quantum to the sector stands at about Rs 4.38 lakh crore.
Demonetisation had slowed the disbursement momentum of micro finance companies, simultaneously raising the spectre of more delinquencies.
The bullish bets were fuelled a day after the auto components major completed its acquistion of Finnish wiring harness maker PKC Group for over Rs 4,000 crore.
While the government under its Indradhanush scheme, has favoured capital infusion in weaker PSBs, it put forth some stricter performance benchmarks.
Of the 26 Nifty constituents that have outdone the benchmark rally in 5 weeks, 19 have witnessed significant cut in street earnings expectations for FY18.
The metal sector accounts for 3.4-7.3% of the domestic loan book of some of the bigger banks and about a fifth of system-wide stressed assets.
Among the three lenders that created inventories of stressed assets to “below investment grade companies", the slippages from the lists have been varying.
The Kolhapur-based small bank has yielded 42% in less than six months and is currently trading at a rich FY18 price-to-book multiple of 3.2 times as per Bloomberg estimates.
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