The macro indicators suggest that the Indian economy is recovering and if the growth sustains, the public sector banks could do well going ahead, said Sanjeev Prasad, Managing Director, Co-Head, Kotak Institutional Equities.
Speaking to CNBC-TV18, Prasad said that the valuations of PSU Banks remain cheap and the State Bank of India (SBI) was his top pick.
“If the economic recovery continues and concerns about credit costs and non-performing loans (NPLs) start reducing, I presume we will see some rerating in multiples of PSU banks and NBFCs,” he said.
Prasad is of the view that the valuations of select non-banking financial companies (NBFCs)were good while rest others remain expensive.
Going ahead, he expects strong earnings recovery with Nifty FY22 and FY23 EPS growth by 20-28 percent.
“On a YoY basis, you will see pretty strong earnings recovery in FY22 and in FY23. We are looking at 20 percent growth for the net profits of Nifty-50 index for FY22 followed by almost 28 percent for FY23,” he said.
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