Four PSU bank stocks turn multibaggers in the last two years; Indian Bank gained the most!

Credit growth has improved from its historically low levels in recent years. Earnings growth is strongly supported by a healthy recovery from bad debt.   

After almost a decade, India’s financial sector appears to be out of turmoil. Almost all major banks have overcome their solvency concerns and are on their way to growth. Asset quality is improving steadily in most banks despite the disruption caused by COVID-19. Credit growth has improved from its historically low levels in recent years. Earnings growth is strongly supported by a healthy recovery from bad debt.   

In addition, most Tier 1 and Tier 2 bank lending books are stress-tested and well-prepared to withstand most foreseeable adversities. These financial institutions made a lot of progress since the Dirty Dozen (the largest 12 bad loans), which were first announced in the summer of 2017. Eight of the 12 reported accounts were resolved with a recovery rate of 50 per cent or higher. Two accounts are in liquidation while two other accounts' resolution is underway.   

Interestingly, Bank Nifty has outperformed Nifty index by a wide margin, so far in 2022. What’s more surprising is the fact that Nifty PSU banks have outperformed Nifty as well as Bank Nifty!   

So, here is the performance of NSE-listed PSU banks in the last two years: 

Interestingly, 10 out of 13 stocks managed to deliver positive returns in the last two years. Now, here comes the most fascinating thing which would leave everyone spellbound and it's the fact that not one or two stocks but as many as four stocks have turned into multibagger ">Multi-baggers!  

Indian Bank led from the front with gains of nearly 194 per cent, followed by Bank of Baroda and State Bank of India, which jumped 159 per cent & 152 per cent, respectively.  

Meanwhile, UCO Bank delivered a dismal performance.