as per Financial Express, Goldman Sachs is of the view that stocks in PSU banking space are on the cusp of re-rating. The investment bank has rationalized that the election outcome and improvement in macroeconomic scenario will change the fortunes of the players. It appears that Goldman Sachs does not see the non-performing asset burden a meaningful risk to the sector. Or it believes that the election outcome could miraculously help the banks recover their bad loans. All said and done most of these banks are facing an acute pressure on their net worth. Most are likely to dilute equity to meet Basel III capital norms. And the low profitability coupled with equity dilution could only squeeze shareholder returns further. So according to us, investors would be better off not speculating on these stocks based on election optimism.
Posted on: Sat, 29 Mar 2014 15:26:48 +0000
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