PSU bank stocks: Why Ashish Chaturmohta sees further rerating and his top pick
Chaturmohta said a few PSU banks have posted 13-15 per cent credit growth. Their net NPA numbers or the slippage ratios, are broadly in line with private peers, he said.
- Dec 1, 2025,
- Updated Dec 1, 2025 2:16 PM IST
Ashish Chaturmohta, Managing Director for Portfolio Management Services at JM Financial, said PSU banks continued to trade at a discount to private peers despite their recent gains and improving operational performance. He sees room for further re-rating and named State Bank of India (SBI) as his top PSU bank pick.
In an exclusive interview to Business Today, he insisted one should look PSU banks from the operational parameters perspective and PSU banks are showing very strong traction from a credit growth perspective, and not just the corporate lending part.
"But if you look at the MSME or personal loans, we are seeing very good traction coming from a lot of these PSU banks. Some PSU banks have also posted 13-15 per cent kind of credit growth in this year. And if you look at from the quality perspective, if you look at the net NPA numbers or the slippage ratios, they are broadly in line with what your private peers are showing," Chaturmohta said.
The expert said the name of a good private banker might have NPAs 50-100 basis point higher than PSU peers.
"If you look at the operational parameters of a lot of these PSU banks are in comparison with their private peers. But if you look at from a valuation perspective, there is a very deep discount, which is there. Most PSU banks today, excluding their subsidiaries' valuation, are quoting at 0.8-1 times price to book versus 2.5-2.7 times for private peers," he said.
Chaturmohta, thus, there remains a scope for decent re-rating on PSU banking counters.
From the technical chart perspective, there is a relative strength, which is being witnessed in PSU bank versus private banks, he said noting that the Nifty bank must have delivered somewhere close to 13-14 per cent return. Within that ICICI bank may have delivered 7 per cent and HDFC would have delivered 13 per cent. This is against PSU banks that delivered a return of almost 29 per cent.
"So you can see the amount of outperformance which PSU banks are delivering at this point of time. And still at current levels, we believe that strength is visible. So we would like to remain overweight in the overall PSU banks," he said.
Chaturmohta said SBI is his top pick in the PSU banking pack, if one wants to take individual bet.
"We believe that stock has a potential to move towards Rs 1,250-1,300 kind of levels in the medium term, purely looking into the short term to medium term data from a technical perspective as well," Chaturmohta said.
Ashish Chaturmohta, Managing Director for Portfolio Management Services at JM Financial, said PSU banks continued to trade at a discount to private peers despite their recent gains and improving operational performance. He sees room for further re-rating and named State Bank of India (SBI) as his top PSU bank pick.
In an exclusive interview to Business Today, he insisted one should look PSU banks from the operational parameters perspective and PSU banks are showing very strong traction from a credit growth perspective, and not just the corporate lending part.
"But if you look at the MSME or personal loans, we are seeing very good traction coming from a lot of these PSU banks. Some PSU banks have also posted 13-15 per cent kind of credit growth in this year. And if you look at from the quality perspective, if you look at the net NPA numbers or the slippage ratios, they are broadly in line with what your private peers are showing," Chaturmohta said.
The expert said the name of a good private banker might have NPAs 50-100 basis point higher than PSU peers.
"If you look at the operational parameters of a lot of these PSU banks are in comparison with their private peers. But if you look at from a valuation perspective, there is a very deep discount, which is there. Most PSU banks today, excluding their subsidiaries' valuation, are quoting at 0.8-1 times price to book versus 2.5-2.7 times for private peers," he said.
Chaturmohta, thus, there remains a scope for decent re-rating on PSU banking counters.
From the technical chart perspective, there is a relative strength, which is being witnessed in PSU bank versus private banks, he said noting that the Nifty bank must have delivered somewhere close to 13-14 per cent return. Within that ICICI bank may have delivered 7 per cent and HDFC would have delivered 13 per cent. This is against PSU banks that delivered a return of almost 29 per cent.
"So you can see the amount of outperformance which PSU banks are delivering at this point of time. And still at current levels, we believe that strength is visible. So we would like to remain overweight in the overall PSU banks," he said.
Chaturmohta said SBI is his top pick in the PSU banking pack, if one wants to take individual bet.
"We believe that stock has a potential to move towards Rs 1,250-1,300 kind of levels in the medium term, purely looking into the short term to medium term data from a technical perspective as well," Chaturmohta said.