Public Sector Undertakings (PSU) Banks in India are financial institutions where the majority stake (i.e., more than 50%) is held by the Ministry of Finance (India) of the Government of India or the State Ministry of Finance of various State Governments of India.

These banks play a crucial role in the financial sector and in serving a social welfare objective. Despite being government-owned, their shares are listed on stock exchanges, symbolizing their distinctive position as entities that operate at the intersection of public service and commercial activity.

In the Interim Budget 2024, Public sector banks (PSBs) were among the entities that reaped benefits from the Budget, indicating a promising outlook. The Nifty PSU Bank index saw a notable increase of over 3%, signifying potential growth in this sector.

The reduction in fiscal deficit and borrowing estimates positively pushed PSU banks. Reports indicate that PSU banks hold more government bonds than private banks, contributing to their favorable performance.

Here are the top five PSU Bank Stocks to watch for investment in India in 2024.

A) State Bank of India

State Bank of India (SBI) is a well-respected Fortune 500 company and a leading Indian public sector bank headquartered in Mumbai. It was established over 200 years ago and is widely known for its trustworthiness and longstanding heritage.

With an asset base of over Rs. 61 trillion, SBI is India’s largest banking and financial services organization. The Bank operates a vast network of over 22,500 branches, 63,580 ATMs/ADWMs, and 82,900 BC outlets, serving over 50 crore customers.

SBI’s success is attributed to its size and commitment to innovation and customer-centric values, including Service, Transparency, Ethics, Politeness, and Sustainability.

In addition to core banking services, SBI has well-established subsidiaries such as SBI General Insurance, SBI Life Insurance, SBI Mutual Fund, and SBI Card. It also has a global presence with 241 offices in 29 foreign countries.

Looking ahead, SBI continues to evolve and redefine the banking landscape in India, aiming to provide responsible and sustainable banking solutions to meet the changing needs of customers and the broader community.

Positive trends that make you watch for investment in the SBI Stock are as below –

1) Strong Financials

a) Interest Earned – Year on Year (YoY) Growth in the quarter ended Mar 2024 is 19.46% vs 31.41% in Mar 2023

b) Net Profit – YoY Growth in the quarter ended Mar 2024 is 23.98% vs 83.18% in Mar 2023        

Quarterly Results Snapshot (Standalone)                 

(Amount in Rs Crores)

Particulars	Mar’24	Mar’23	Change (%)
Interest Earned	1,11,042.63	92,951.06	19.46%
Operating Profit (PBDIT)	28,747.55	24,621.11	16.76%
% of Net NPAs	0.57%	0.67%	-0.10%
% of Gross NPAs	2.24%	2.78%	-0.54%
Exceptional Items	0.00	0.00
Net Profit	20,698.35	16,694.51	23.98%

On March 24, the company posted positive results:

The quarter’s Gross NPA ratio was at its lowest at 2.24%, signifying a further improvement in asset quality. The interest earned for the quarter was the highest at Rs 111,042.63 crores, indicating strong interest income generation.

The quarter’s net Interest Income (NII) reached the highest at Rs 41,655.19 crores, reinforcing strong core income generation.

The company exhibits strong lending practices with a commendably low Gross Non-Performing Asset (NPA) ratio of 2.24% in March 2024. This indicates a healthy portfolio with limited non-performing assets.

Furthermore, the company has demonstrated robust long-term growth, with the net profit increasing at an impressive annual rate of 323.26%. This showcases the company’s ability to generate sustainable and substantial gains over time.

c) Deposits – YoY Growth in the year ended March 2024 is 11.13% vs 9.19% in March 2023

d) Advances – YoY Growth in the year ended March 2024 is 15.78% vs 17.02% in March 2023                                             

Balance Sheet Snapshot (Standalone) (Amount in Rs Crores)

Particulars	Mar’24	Mar’23	Change (%)
Deposits	49,16,076.77	44,23,777.78	11.13%
Advances	37,03,970.85	31,99,269.30	15.78%
Investments	16,71,339.66	15,70,366.23	6.43%
TOTAL ASSETS	61,92,790.24	55,28,044.55	12.02%

2) Positive Technical Trend

From a technical analysis perspective, the stock is currently in a promising Bullish range, suggesting a positive trend in the stock’s price movement. The technical trend has improved from Mildly Bullish on 06-Jun-24, generating a notable 3.1% return.

Multiple technical indicators, including MACD, Bollinger Band, KST, DOW, and OBV, point to a Bullish sentiment for the stock, underlining the positive momentum in its price movement.

3) High institutional holdings

Additionally, the stock boasts high institutional holdings at 35.09%, indicating strong support and confidence from institutional investors with robust capabilities and resources to analyze company fundamentals.

4) Consistent returns

The stock has also delivered consistent returns over the last 3 years. It has outperformed the BSE 500 with a remarkable 46.13% return over the past year, displaying consistent outperformance in the previous three annual periods.

B) Bank of Baroda (BOB)

Established on July 20, 1908, the Bank of Baroda is a state-owned banking and financial services organization with its headquarters in Vadodara, Gujarat, India.

It is India’s third largest prominent public sector bank with a strong presence in the country. The Bank has over 8,200 branches, 10,000 ATMs, 1,200 self-service e-lobbies, and 20,000 Business Correspondents, providing convenient access to its services. Additionally, it has a significant international presence with 100 branches/offices in 20 countries.

Bank of Baroda has wholly owned subsidiaries such as BOB Financial Solutions Limited (formerly known as BOB Cards Ltd.), BOB Capital Markets, and Baroda Asset Management India Ltd. It also has joint ventures in life insurance, including IndiaFirst Life Insurance Company Limited, and in infrastructure financing, such as India Infradebt Ltd.

The Bank also owns 98.57% of The Nainital Bank and has sponsored three Regional Rural Banks: Baroda Uttar Pradesh Gramin Bank, Baroda Rajasthan Gramin Bank, and Baroda Gujarat Gramin Bank.

Positive trends that make you watch for investment in the BOB Stock are as below –

1) Strong Financials

a) Interest Earned – YoY Growth in the year ended Mar 2024 is 25.69% vs 28.20% in Mar 2023

b) Net Profit – YoY Growth in the year ended Mar 2024 is 26.08% vs 94.02% in Mar 2023

Amount in Crores (Rs)

Particulars	Mar’24	Mar’23	Change (%)
Interest Earned	1,12,605.94	89,588.54	25.69%
Operating Profit (PBDIT)	30,965.22	26,863.54	15.27%
% of Net NPAs	0.68%	0.89%	-0.21%
% of Gross NPAs	2.92%	3.79%	-0.87%
Exceptional Items	0	0
Net Profit	17,788.78	14,109.62	26.08%

– The Gross Non-Performing Assets (NPA) ratio is at its lowest at 2.92%.

– The company has declared positive results for the last 12 consecutive quarters, indicating consistent performance.

– Interest earned has increased by 25.69%, i.e. to Rs 1,12,605 crore in March 2024 from Rs 89,588.54 in March 2023.

– The Net NPA is at its lowest at 0.68%, indicating a healthy balance sheet.

c) Deposits YOY Growth in the year ended Mar 2023 is 15.08% vs 8.16% in Mar 2022

d) Advances – YoY Growth in the year ended Mar 2023 is 21.08% vs 10.03% in Mar 2022

Amount in Crores (Rs)

Particulars	Mar’23	Mar’22	Change (%)
Deposits	12,03,687.79	10,45,938.56	15.08%
Advances	9,40,998.27	7,77,155.18	21.08%
Investments	3,62,485.36	3,15,795.39	14.78%
TOTAL ASSETS	14,58,561.54	12,77,999.84	14.13%

Additionally, the company implements robust provisioning methods, resulting in a Provision Coverage Ratio of 71.26%.

2) Long-term fundamental strength

It has shown strong long-term fundamental strength with a 110.20% compound annual growth rate (CAGR) in net profits.

3) Strong Technicals

The stock is technically in a mildly bullish range, supported by indicators such as MACD, Bollinger Bands, and OBV.

4) Positive ratios

With a Return on Assets (ROA) of 1.1, the stock is considered to have a fair valuation with a price-book value (P/B) ratio of 1.3.

5) No overvaluation

The stock trades at a fair value compared to its average historical valuations, suggesting it may not be overvalued.

Over the past year, the stock has generated a return of 50.73%, outperforming the market while registering a profit growth of 26.1%. The company’s PEG ratio is 0.3, suggesting potential undervaluation.

6) Good strength of Institutional Investor holdings

The stock is well-supported by institutional investors, with high institutional holdings at 28.7%.

There is evidence that institutional investors, with their resources and capabilities, prioritize fundamental analysis over retail investors.

7) Consistent returns

The stock has demonstrated consistent returns over the last three years and has outperformed its benchmark index, the BSE 500, in the previous three annual periods, adding to its strong performance record.

C) Punjab National Bank

Punjab National Bank (PNB) is India’s second-largest public sector bank, with a history of over 125 years. The Bank was founded with the idea that Indians should have a national bank and started its operations in Lahore on April 12, 1895. After the nationalization of banks in India in 1969, the government became the largest shareholder of Punjab National Bank.

As of September 2023, Punjab National Bank had a network of 51519 domestic branches, 2 international branches, 12645 ATMs, and 28782 Business Correspondents, totaling 10092 touch points. The Bank’s Gross Global Business at the end of September 2023 was Rs. 22.51 Trillion.

Punjab National Bank, IFSC Banking Unit (PNB IBU), GIFT City, was established on April 08, 2022, to provide international banking services to Indian and overseas customers. It is regulated by the International Financial Services Centres Authority (IFSCA).

Positive trends that make you watch for investment in the PNB Stock are as below –

1) Strong Financials

a) Interest Earned – YoY Growth in the year ended Mar 2024 is 25.55% vs 13.71% in Mar 2023

b) Net Profit – YOY Growth in the year ended Mar 2024 is 228.84% vs -27.47% in Mar 2023

Annual Results Snapshot (Standalone)

Particulars	Mar’24	Mar’23	Change(%)
Interest Earned	1,06,901.62	85,144.11	25.55%
Operating Profit (PBDIT)	24,930.81	22,528.75	10.66%
% of Net NPAs	0.73%	2.72%	-1.99%
% of Gross NPAs	5.73%	8.74%	-3.01%
Exceptional Items	0	0
Net Profit	8,244.62	2,507.20	228.84%

Over the past year, the company has shown strong and consistent growth, with a net profit increasing at an impressive average annual rate of 23.10%. Additionally, there has been a notable uptick in Interest, growing by an average rate of 3.03%, leading the company to declare very positive results on March 24.

It’s worth noting that the company has demonstrated positive results for the last 5 consecutive quarters, indicating a favorable and stable performance.

Looking at specific financial metrics, the PBT LESS OI(Q) grew significantly, reaching Rs 580.02 crore and increasing by 207.7%. Similarly, the PAT(Q) reached Rs 3,010.27 crore, reflecting an 88.3% growth. Furthermore, the company has maintained its Gross NPA(Q) at 5.73%.

c) Deposits – YOY Growth in the year ended Mar 2024 is 6.91% vs 11.77% in Mar 2023

d) Advances – YoY Growth in the year ended Mar 2024 is 12.47% vs 14.10% in Mar 2023

Balance Sheet Snapshot (Standalone) (Amounts in Rs crores)

Particulars	Mar’24	Mar’23	Change (%)
Deposits	13,69,712.81	12,81,163.10	6.91%
Advances	9,34,430.59	8,30,833.98	12.47%
Investments	4,20,318.21	3,95,996.72	6.14%
TOTAL ASSETS	15,63,223.02	14,63,080.62	6.84%

2) Strong Technicals

Regarding technical analysis, the stock is currently within a mildly bullish range, supported by bullish indicators such as the MACD and KST technical factors. Moreover, with a ROA of 0.5, the company’s valuation seems attractive, boasting a 1.3 price-to-book value and trading at a discount compared to its historical valuations.

3) Impressive PEG Ration

The stock’s impressive performance is further emphasized by its return of 143.41% over the past year, accompanied by a remarkable 228.8% rise in profits. Notably, the company’s PEG ratio stands at an impressive 0.1.

4) Promoters are the major shareholders

Finally, it’s important to highlight that promoters hold the majority of the company’s shares, indicating a strong and vested interest in the company’s success.

D) Canara Bank

Canara Bank, founded in 1906, is one of the oldest and largest public sector banks in India. The bank’s headquarters is located in Bangalore, Karnataka. Founded in 1906 in Mangalore, it was nationalized in 1969. The Bank has a global presence with offices in London, Dubai, and New York.

As of March 2024, Canara Bank serves over 11.17 crore customers through 9604 branches and 12,155 ATMs/Recycler spread across all Indian states and Union Territories. It has also significantly contributed to corporate social responsibilities by serving national priorities, promoting rural development, and enhancing rural self-employment. The Bank aims to continue its growth and remain committed to serving the nation while focusing on industry benchmarks in profitability, operational efficiency, asset quality, risk management, and digital innovation.

Positive trends that make you watch for investment in the Canara Bank Stock are as below –

1) Strong Financials

a) Interest Earned – YoY Growth in the year ended Mar 2024 is 28.74% vs 21.63% in Mar 2023

b) Net Profit – YoY Growth in the year ended Mar 2024 is 37.26% vs 62.21% in Mar 2023

Annual Results Snapshot (Standalone)

Amount in Rs Crores

Particulars	Mar’24	Mar’23	Change (%)
Interest Earned	1,08,687.93	84,424.78	28.74%
Operating Profit (PBDIT)	29,412.59	27,716.01	6.12%
% of Net NPAs	1.27%	1.73%	-0.46%
% of Gross NPAs	4.23%	5.35%	-1.12%
Exceptional Items	0	0
Net Profit	14,554.33	10,603.76	37.26%

It also shows healthy long-term growth, with the net interest income (excluding other income) growing at an annual rate of 21.41% and net profit at an impressive 111.12%.

In terms of financial performance, the net interest income for the quarter is the highest at Rs 9,580.20 crore, and the interest earned for the quarter is the highest at Rs 28,807.35 crore.

Additionally, the company has declared positive results for the last 16 consecutive quarters, indicating consistent performance and financial stability.

Furthermore, the gross non-performing assets (NPA) ratio is impressively low at 4.23%, reflecting the company’s ability to manage credit risks effectively.

c) Deposits – YOY Growth in the year ended Mar 2024 is 11.29% vs 8.54% in Mar 2023

d) Advances – YoY Growth in the year ended Mar 2024 is 12.15% vs 18.06% in Mar 2023

Balance Sheet Snapshot (Standalone)

 Amount in Rs Crores

Particulars	Mar’24	Mar’23	Change ( % )
Deposits	13,12,366.61	11,79,218.61	11.29 %
Advances	9,31,612.83	8,30,672.55	12.15 %
Investments	3,57,454.42	3,19,038.45	12.04 %
TOTAL ASSETS	14,91,540.71	13,45,732.23	10.83 %

2) Strong provisioning practices

The company demonstrates strong provisioning practices, with a provision coverage ratio of 61.19%, which indicates a sound approach to risk management.

3) Strong Technicals

From a technical analysis perspective, the stock is currently in a bullish range, and the technical trend has shown improvement. A mildly bullish position on 06-Jun-24 generated a 3.9% return.

Moreover, multiple technical indicators, such as MACD, Bollinger Bands, KST, and OBV, indicate a bullish stock outlook.

4) High Institutional holdings

The stock also has high institutional holdings, at 24.96%. This suggests that institutional investors, who have better capability and resources to analyze companies’ fundamentals, have significant confidence in the company’s prospects.

5) Consistent returns

In terms of returns, the stock has demonstrated consistent performance over the last 3 years and has significantly outperformed the BSE 500 index, generating 94.74% returns in the previous 1 year.

E) Union Bank

Union Bank of India is one of the top public-sector banks in the country. The Government of India owns 74.76% of the Bank’s total paid-up capital. The Bank originated in Mumbai on November 11, 1919.

On April 1, 2020, Andhra Bank and Corporation Bank merged with Union Bank of India. The Bank has a network of over 8,400 domestic branches and 9,300 ATMs, employs over 75,000 people, and has 20,000 Business Correspondents. It operates across all States and Union Territories.

As of March 31, 2024, the Bank’s total business was Rs 21,26,412 crores, with deposits of Rs 12,21,528 crores and advances of Rs 9,04,884 crores. Additionally, the Bank has 2 overseas branches in Dubai and Sydney, a banking subsidiary in London, a banking joint venture in Malaysia, 4 para-banking subsidiaries, 2 joint ventures, and 1 associate – Chaitanya Godavari Gramin Bank. Union Bank of India was the first large public sector bank to implement a 100% core banking solution.

The Bank has been recognized with awards for its technological advancements, digital banking, financial inclusion, MSME, and human resource development.

Union Bank of India has corporate and registered headquarters in Mumbai’s Nariman Point area.

Positive trends that make you watch for investment in the Union Bank Stock are as below –

1) Strong Financials

a) Interest Earned – YoY Growth in the year ended Mar 2024 is 23.57% vs 18.84% in Mar 2023

b) Net Profit – YoY Growth in the year ended Mar 2024 is 61.84% vs 61.18% in Mar 2023

Annual Results Snapshot (Standalone) (Amount in Rs crores)

Particulars	Mar’24	Mar’23	Change (%)
Interest Earned	99,777.96	80,743.34	23.57 %
Operating Profit ( PBDIT )	28,210.63	25,467.16	10.77 %
% of Net NPAs	1.03 %	1.70 %	-0.67 %
% of Gross NPAs	4.76 %	7.53 %	-2.77 %
Exceptional Items	0.00	0.00
Net Profit	13,648.31	8,433.27	61.84 %

The company has witnessed healthy long-term growth, with Net Interest Income (excluding other income) growing at an impressive annual rate of 29.09% and Net profit increasing by 45.99%.

Notably, the company has consistently declared positive results for the last 16 consecutive quarters, reflecting its strong financial performance.

Furthermore, the Profit After Tax (PAT) for the 9 months stands at Rs 10,411.88 crore, signaling a substantial growth of 51.45%.

Additionally, the company has effectively managed its non-performing assets (NPA), achieving a low Gross NPA (in the quarter) at 4.76%.

The Net Interest Income (NII) has peaked at Rs 9,436.63 crore, underlining the company’s robust financial performance.

c) Deposits – YOY Growth in the year ended Mar 2023 is 8.26% vs 11.75% in Mar 2022

d) Advances – YoY Growth in the year ended Mar 2023 is 15.26% vs 11.85% in Mar 2022

Balance Sheet Snapshot (Standalone)

Particulars	Mar’23	Mar’22	Change (%)
Deposits	11,17,716.32	10,32,392.63	8.26 %
Advances	7,61,845.46	6,61,004.66	15.26 %
Investments	3,39,299.05	3,48,507.39	-2.64 %
TOTAL ASSETS	12,84,343.98	11,90,790.77	7.86 %

2) Strong Technicals

From a technical analysis perspective, the stock is currently in a mildly bullish range, supported by multiple bullish indicators such as Moving Average Convergence Divergence (MACD), Know Sure Thing (KST), and On-Balance Volume (OBV).

3) Attractive valuations

Moreover, with a Return on Assets (ROA) of 1, the stock presents an attractive valuation, with a price-to-book value of 1.2. Notably, the stock trades at a discount compared to its average historical valuations, which may present an appealing opportunity for investors.

4) Impressive growth

Over the past year, the stock has demonstrated impressive growth, generating a return of 102.49%, while its profits have risen by 61.8%. This indicates a low PEG ratio of 0.2, highlighting the company’s growth potential and attractive valuation.

5) Increasing institutional investors participation

In addition, institutional investors have shown increasing participation, with their stake growing by 0.73% over the previous quarter, collectively holding 19.37% of the company. It’s worth noting that institutional investors possess the capability and resources to conduct in-depth analyses of a company’s fundamentals, providing a level of insight that sets them apart from many retail investors.

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Disclaimer: Investing in the Equity market in India is subject to risks, i.e. the market keeps on fluctuating. This article is purely for educational purpose. The views expressed and data provided here are by Equitypandit’s team. Kindly do not completely depend on the information provided as the risk appetite differs from individual to individual and there are various other factors in the market to determine the factors to invest in the market.