PSU banks have just engineered a fundamental turnaround once deemed impossible, dragging net non-performing assets (NPAs) down to historic lows that match or beat their private sector peers. Yet, despite state-owned lenders hitting record profit milestones, market insiders are heavily shifting preference toward leading private sector banks. As the market transitions into a tougher macroeconomic environment marked by global uncertainty and intensifying deposit pressures, analysts caution that flocking to cheaper PSU stocks solely for their low valuations could backfire, pointing instead to larger private banks as the more compelling risk-reward play for FY27.
Citing superior earnings compounding potential and more attractive risk-reward dynamics at current valuations, analysts are explicitly tilting toward larger private sector banks.
