PSU Banks Enter New Phase As Recovery-Driven Gains Moderate, Vaibhav Sanghavi Explains

PSU bank stocks have seen a sharp correction after a strong multi-year rally driven by improving asset quality, falling NPAs, and stronger profitability. Business Today TV’s Shailendra Bhatnagar discussed with Vaibhav Sanghavi, CEO of ASK Hedge Solutions, that much of the recovery-led re-rating may already be reflected in valuations. As PSU banks move closer to historical valuation averages, investors are assessing whether earnings growth can remain strong without the tailwind of large NPA recoveries. Rising interest rate risks, potential pressure on treasury portfolios, and a changing banking landscape are adding to the uncertainty. This analysis examines the outlook for PSU banks, compares valuation trends with private lenders, and explores whether the sector can sustain its recent momentum or enter a period of consolidation.