As promised, I have started the process of valuing the PSU banks in India. Listed below is the strategy that I am going to adopt. This time I will be sticking to the process of relative valuation.
1. I will be selecting around 8 banks based on their market cap and asset base. I wont be selecting very small banks.
2. For each bank, I will be calculate ratios like P/BV, P/E, NPM, CAR, etc.
3. I will assign a rank to each bank for each ratio.
4. At the end, the cumulative rank for each bank will be calculated.
5. The bank with the least rank(rank 1 being the least), will qualify to be the best bet amongst the banks in India.
The above process looks interesting, but might very well have hidden flaws. Once we arrive at the results, we will diagnose the results for any kind of flaws. So, keep watching this space!!!
No comments:
Post a Comment