Private banks offer superior valuation comfort over PSU peers, says Systematix; lists top picks [Read More]

Systematix Institutional Equities, a domestic brokerage firm, favors private sector banks over their public sector counterparts, citing superior valuation comfort. \r

While acknowledging that PSU banks may show better operating profit growth in FY25 due to factors like low CDR and favorable base effects from FY24, Systematix believes private banks offer superior risk-adjusted returns in the medium to longer term. This preference is underpinned by private banks' deeper market penetration, conservative underwriting standards, and tech-enabled operational efficiencies. \r

Despite near-term challenges affecting some private banks' valuations, Systematix anticipates improvements as they resolve current issues, potentially boosting share returns alongside expected growth in adjusted book value per share (ABVPS).