InvestorQ : Does the market cap of PSU banks still trail the market cap of HDFC Bank? That used to be the scenario some time back?
Dawn Cherian made post

Does the market cap of PSU banks still trail the market cap of HDFC Bank? That used to be the scenario some time back?

Answer
user profile image
Dilmini Mercia answered.
4 months ago


Despite HDFC Bank stock price correcting by nearly 40% in the last couple of months, its market cap is substantially more than the market capitalisation of all PSU banks put together. For example, post the consolidation, the 13 listed PSU banks had a combined market of Rs.255,000 crore while HDFC Bank alone had a market cap of Rs.458,000 crore. That gap is largely due to the better control exercised over asset quality, consistent growth in revenues and profits as well as better management of costs leading to improved NIMs. Private Banks like HDFC do not have to worry about the overhang of NPAs from industrial loans as their book is more retail and consumer driven. Also, the PSU banks have a greater exposure to the MSME segment and that would be the pain point. Private Banks may face some pressure on consumer loans but that would be more temporary. SBI alone has a market cap of Rs.1.40 trillion and all the other PSU banks put together are just about Rs.1.15 trillion. It could be a really long road for PSU banks to get profitable once again.