Madhusudan Kela expects 'positive surprise' from PSB stocks

Ace investor and market guru Madhusudhan Kela says he is bullish on India's public sector banks (PSBs), which have seen a wave consolidation in the recent past. Speaking exclusively with Business Today TV, Kela highlighted the positives of PSBs, saying with the "significant consolidation" in this space, investing in PSU banking stocks could come as a "positive surprise" over the next few quarters.

Explaining his bullishness on PSU banks, Kela added, "There were a total of 28 PSU banks, three to four years years back. Now there are only 12 PSU banks left. Going by the intention of the government, there will be only eight left in the next two years. There is significant consolidation. These stocks are very cheap, some of them are quoting at 1-1.2 times of operating profit and 0.5 times of book value."

Talking about the privatisation of PSU Banks, Kela added, "If IDBI really gets privatised, who is to say that some more PSBs will not get privatised in the time to come? These stocks are very cheap; they are well provided for. Most of these banks are provided 70-80 per cent of their gross NPL, in the last 5 years. We are clearly seeing profit and loss account improvement in a lot of these banks. Last quarter saw an improvement and I am sure the next few quarters will be a positive surprise to the market. I believe all of this put together, makes a good case for a good investment."

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