The rampant growth of COVID 19 has brought all industries to stand still since March 24, 2020 resulting in the downfall of their market share value. Especially, the Banking sector shares are the worst hit during the last 60 days.
It was found that share prices of five banks as mentioned hereunder are available for Just Rs.151.20. Let us see the reasons.
- BOB – 37.70
- PNB – 27.00
- Yes Bank – 27.55
- IDFC – 19.65
- Federal Bank – 39.30
- These banking shares are quoted at 10% to 15% of their peak value three months to six months back. The market cap (number of shares multiplied by market share rate ) was as follows Rs.
- BOB. 16,957 crore
- PNB. 25,032 crore
- Yes bank 34,137 crore
- IDFC bank 9,427 crore
- Federal bank 7,803 crore
The market cap of all five banks is very low compared to their deposits and advances. It is mainly due to low profits posted and huge provision made for Bad loans.
Advances of BOB are Rs.468,099 crore. Similarly advances of PNB are Rs.4,97,000 crore, for Yes bank Rs.2,63,000 crore and IDFC Rs.98,109 crore and for Federal bank Rs.1,10,000 crore. With so many advances in the balance sheet, investors are fearing about Probably NPA level in the near future.
Same is the case with some private banks also compared to last year peak level, Axis bank share price fallen from Rs.827 to RS.364.95 yesterday. Similarly IndusInd Bank from Rs.1672 to Rs.364, ICICI Bank from Rs.552 to 307 and biggest bank SBI from Rs.373 to Rs.153 yesterday.
So to some extent, SBI and ICICI Bank are showing less decline. By selling one share of SBI you can purchase five banks shares as mentioned above for Rs.151.20. With one share of ICICI bank or IndusInd Bank or Axis Bank you can purchase two shares of above five banks comfortably. With one HDFC bank share, you can purchase five shares of above five banks.
So a distrust is ruling in the market between the value on Bank’s book and investor perception.
Let us hope good days for Indian banks.