Banking stocks I'm buying | 50L investment
hi everyone welcome to today's video so today we are going to analyze some of my favorite banking stocks and which banks i am investing my money in yesterday i released the part 1 of the video where we analyzed the entire banking industry why it is growing and if you are betting on india's economy why you should go and invest money in banks right so today we are going to take a deeper look at this analysis and i am going to compare six key banking stocks and i am going to do it in a very interesting manner i am going to compare psu stocks small finance banks and major commercial banks and i will give you my verdict that which of these am i picking and why on this video i am categorically going to help you understand how to do fundamental comparisons between peer stocks so that will help you improve your arsenal of stock market investing if you like that please press the like button that would make me super happy and it helps the videos like these on the youtube algorithm now before we get the video started here is a fun interesting question that tell me which is your favorite bank now please don't say svr i love making sbi jokes so on this video i'm going to explain why do i make sbi jokes so please stay tuned right so let's get this video started and first we are going to take a look at whether or not you should be investing in psu stocks and which is the stock that i'm talking about which i am very bullish about so psu stocks you should invest if you believe in the narrative that major problems or major structural issues in the psu bands be it sbi be it punjab national bank be it canada bank if the major structural issues have been solved then you should go and invest so couple of very important points about the psu banks that they enjoy massive trust now if you go and speak with a lot of people they will say that you know what i'm going to open my bank account in sbi or punjab national bank because it's a sarkari bank and there is no way that the government will let my money die right in these banks if something bad happens government will step in and it will save me now this narrative is something that has been built over decades over generations right so people believe in the power of psu banks now the level of trust that they have is unparalleled this is the first key point second is that unfortunately abusing this trust with psu banks is also very easy because they know that they have very high level of trust now if people like vijay malia and nirav modi take loans from us and then they run away to uk it's fine right because it is public kapesa what will happen nothing happens then again you know the cycle repeats so these are two important points that you need to keep in mind that in public sector banks number one the trust level is very high and number two this trust can be abused and it is systematically abused at times so if you are an investor in psu banks you must understand to what extent this trust can be abused these days and we will understand this from a simple case study now let's analyze punjab national bank and state bank of india side by side now you can see that i am looking at the entire chart for punjab national bank and it has gone up and down and the price has been shaking like anything and right now it is trailing towards its bottom end 37.5 and this was the price back in 2003 approximately right so the stock price is available at a decent price now there are a few key observation that you should have from this chart right so the first thing that you would notice is that the stock price came from 194 to almost 97.6 in a matter of days right in the month of february now this was approximately the time the neerav modi case happened and since then the stock tanked and it has never been able to recover right now you would say that accepts you know what okay neeram moody case happened now why are you talking about it so now let me show you some of the key things associated with punjab national bank so you can see that the market cap of punjab national bank is 41 000 crore so it's a very big bank interesting thing is that the current price is 37.5 and book value is 84. now this is a very important point that you need to notice that the stock is available at discount now what does book value mean book value simply means this is what the price of entire punjab national bank per stock basis is as per the accountants right this is what accountants are valuing punjab national bank as looking at their books all the assets all the branches all the land all the other things that it owns so the total asset price as per accountant is 84 the stock is trading at 37.5 right it
is somewhat available at a discount now why are people not betting on punjab national bank the reason is very simple that they feel that you know what what if there is like neera modi part 2 or vijay malia part 3 and you know xyz person part 4 right so people are very scared about that therefore they stay away from these psu banks that's one second is that there was a major non-performing asset problem right these npa problem emanates when people like neera modi take the money and run away right and then there are thousands of nero modi's in india and they take money from banks they don't pay them back so that becomes the bank npa and psu banks are not very good at managing this npa so this npa problem is there now if you check the quarterly results and if the financials also indicate a similar story that the bank is not managing its finances properly then agree don't go and invest in something like pnb so let us look at pnb's profits and revenues as of now so you can see that the profits have risen right and it has been going up it has almost stayed consistent and have been going up from the pandemic time right despite so much pandemic so much havoc being created profits are at an all-time high the latest profit in june 2021 quarter was 1497. that has been the profits have been massive and profits have been consistently good so there does not seem to be a fundamental problem here so i am quite hopeful that in terms of punjab national bank the price will at least hit the pre-pandemic level right so i am a buyer in punjab national bank and i feel that it is at a decent reasonable price because i systematically believe that the government has made a lot of changes the npa problem has had its worst share so far it's moving towards better i'm not saying it's completely solved but things are moving towards better things regulations have been enforced now the due diligence process that has been established with public sector bank it is now not very easy for people like neera modi to take loans and run away that is going to be tough right so i am quite bullish i systematically believe in the narrative that hey bank fundamental problems have been addressed to a very large extent that psu banks are going to be on an uptrend now important point to notice that i am not investing in pnb for growth right i am not saying that pnb will become the next hdfc bank and it will like 4x at share prices nothing like that all i am playing is book value and current market price green now the current market price of pmb hits the book value i am going to sell it and i am going to go out i have already invested my money in punjab national bank now this point is validated if you look at ticker tapes default probability and quality checks so overall it seems to be a decent stock keep a track of the new section as well that what are some of the key things that are happening with the bank and that will keep you abreast with whatever is happening with png now you might say that you should compare it to some other stock some other psu right because same scenario might be playing out with another psu so let's look at state bank of india so let me first and foremost talk about the financial summary so the market cap of sbi is very big compared to pnb because sbi has many many branches and here is the sbi joke so i have an svi branch near my house so i went and opened an account because i thought that you know it would be very convenient for me to go and withdraw money now like every day there is like a one kilometer two kilometer line to withdraw the money and you know get into the bank so it has become a nightmare so the point is that sbi is like so rampant so people believe that this is the best bank in india unfortunately it is not right and i'll show you if you take a look at the financials of sbi you will say that hey this is like a very stable type of a company right or a stable type of a bank the revenues have hardly grown massively if you see how the stock trades you will clearly see a trend you will see that it just keeps going up and down right you see all these waves so let me draw it out for you all these waves right take a look at how frequent this wave is right essentially this is a great trading stock this is not a great investing stock why because this is a stock in which you can play support and resistance game beautifully i have done it multiple times sbi is probably one of the best stocks for trading right trading means that you are just holding it for a few days selling it off moving on you are not investing in sbi for like five years ten years something like that right so essentially if you are hitting this level right try to sell it if you are hitting this level try to buy it this is the simple philosophy with svi bank why because the revenues for sbi has been extremely consistent so in summary if you are investing in pnb that's an investment stock given the current circumstances but sbi is a trading stock it has always been now you might say that can you current price and book value gain in sba also yes so take a look at this that current price for sbi is 426 book value is 309 now here the book value is lower than the current price so please keep that in mind that when you are investing in psu stocks you're not investing for growth right now to invest in growth stocks which are some good banking sector growth stocks so this is where we move to category 2 and category 3 stocks so to analyze growth sector let's move on to analyzing two best private sector banks right now now two best private sector banks according to me right now our hdfc bank and co-tech mahindra bank and i'll explain it to you in this section why two three key points that you need to remember when you're investing in hdfc bank and kotek mahindra bank that number one if you are betting on indian economy bet on these banks reason is very simple that these are efficient banks like psus now major npa issues are not going to crop up i am not saying that no npa will happen of course little bit of npa will happen but unlike psu banks hdfc kotech mahindra icici will not have massive npa issues that's one second point is the trend now in india number of digital transactions are going up please watch my video from yesterday i will link it here number of digital transactions are increasing massively in india black money is getting converted more and more to white money with these trends which banks are going to benefit the most it is going to be these major commercial banks because these provide end-to-end services right from opening your bank account to corporate account to giving corporate loans to issuing debit card credit cards and simplifying your finances they can do literally everything and help you invest your money also in terms of wealth management they do literally everything everywhere so with india growing these banks will grow these are directly proportional to india's growth number two there is something called as bank nifty management bank nifty management means that bank nifty is an index it's a collection of different stocks from the banking sector and that has a weighted average of different banks right so don't worry about the finance behind it but it simply says that hdfc bank has a 26 percent weight in that bank nifty co-tech mahindra has 15 16 weight in that bank nifty now that is a massive rate now if people want to move the index you might have seen that the index for the last two months approximately has been trading between 15500 to 16200 right there is a range in which the entire nifty will move similarly there is a range in which entire band nifty moves if you have to move either nifty or bank nifty you have to play around with these hdfc bank and codetech mahindra type of bank so having these types of banks and your portfolio for growth it's almost mandatory so let's look at the finances and let me just quickly do a comparison as to how the overall development of these banks has happened so hdfc started out by like 17.86 now it's trading at like 1443. kotech mahindra bank started at like 7.18 right it's not reading at 1800 so that growth has been crazy right so that's one second is that the size of both kotec and hdfc bank is quite big for example hdfc's market cap is eight hundred and thirty four thousand crores for kotec it's 359 000 crores despite this despite this look at the financial results now they have been able to grow such a massive company hdfc bank the revenues were one zero one now it's 1.55
the revenue generation speed has been such massive despite the company being so big right same goes for co-tech right if you take a look at kotec financials the same thing plays out right thirty eight thousand eight one three crores and now it's fifty six thousand eight one four crores growth has been massive despite these banks being really big so when you are betting on india's economy you have to buy default bet on these banks both the banks are wonderful now here is an interesting thing that i will show you right so if you do a peer comparison then you will see that the pe of otech bank is 36 but hdfc bank is 26.2 right now why is that because hdfc bank is already very big right it's like this size kotec bank is like this size so which has higher potential of growth potential of growth means that you know does kotec bank have a higher potential of growth i would say yes right so if you have to bet on growth of a bank it's likely that from this base to this base it's easier to grow but if something is already very big then the growth rate will slow down at some point right so therefore the pe of kotec bank is higher it does not mean that kotec bank is a worse stock than hdfc i truly believe that both are equally good there is nothing wrong in terms of owning both the stocks i own both the stocks so very quickly let us do some fundamental checks for kotec default probability very low quality checks high growth score very high all these points seem to be on track now one important point that you need to keep in mind is when you are investing in these big commercial banks is that their efficiency or profitability will keep on going up as they gain more and more traction in the indian economy why is that because finance be it investment banks we need general banks anything in the finance industry as you get more and more aum asset under management the operational cost becomes lower and lower so the profitability improves right so i'll explain it in very lame in terms so let's say that hdfc bank has to manage only hundred rupees they will still have to hire staff they will have to pull ceiling fast they will have to put ac bunch of different things but now they have to manage 200 rupees worth of aum hypothetically speaking then the fixed cost is the same right it will not change much they will not have to open another bank branch to manage that hundred rupees worth of asset so the point is that as this asset size grows the banks become more and more and more profitable and there is no reason why banks like cotech mahindra icici bank hdfc bank they will slow down in terms of growth you just need to figure out a good time to buy it so this brings us to the final section of this analysis now let's take a look at whether this is a good time to buy hdfc bank so the 200-day moving average is at approximately 1451 and the stock is trading at approximately 1500 now it is not way off from the 200-day moving average now please explain me what 200-day moving average means right in the comment section i'll check your answers and i will also post my answers on the pinned comments and the description box so the bottom line is that this is trading at a decent price you can still go ahead and buy it please don't say that you know what the stock has fallen by like 50 rupees tomorrow 100 rupees tomorrow and i'm start panicking no please don't do that stocks will go up and down you roughly need to buy them right don't say that okay when it exactly hits the 200 dma then only i will buy it please don't make that end of mistake that's one now let's take a quick look at co-tech mahindra bank so again same issue so with kotek mahindra bank again it's like literally hitting the 200 dma so you can definitely buy it so from this angle i would say that both these stocks are wonderful i do not see them falling too much from this point and these are excellent investment opportunities in mind now if you tell me that hey can you tell me like a bifurcation of banking sector stocks where i should invest where my money can go 2x3x forex probably right this is not an investment advice you should go and invest in small finance funds now according to me there are two top small finance banks right now and i'll explain you the reasons also one is equita small finance bank i will help you quickly understand about it so here is what the market cap of the company is 6600 approximately crores if you take a look at its quarterly results right the quarterly results have been wonderful right it has been growing profits have been growing but you will say that exact profit is 12 right here something went wrong with the profit no there is a financing profit issue right financing profit means that essentially when someone pays banks the money the bank has to pay a rate of interest right for example if i go and deposit let's say one lakh rupees in my hdfc bank account bank will pay me a savings rate two to three percent right so that becomes a financing cost for the bank now the second wave of pandemic had hit which sectors really badly the rural sector right or tier two tier three cities where do small finance bank operate they operate in tier two tier three cities villages most that is where major customer bases so they were not able to give out loans to these people therefore this amount is negative this will easily go positive as the rural economy gets back on track right this is not the same issue that you will find in kotech mahindra and hdfc bank so let me show it to you right if you take a look at financing profits it has not gone down to that extent as it has gone down for small finance fines now this is a very important description to understand because your ability to bet on these banks literally comes from this fact that you understand that hey due to the second wave of karuna virus it impacted the rural economy more than the city economies the small finance banks mostly operate in rural tier 2 tier 3 towns they cannot give out loans therefore they are suffering as of now but these numbers will turn around very quickly now let us look at the numbers for g1 finance bank as well so essentially what happened is that the revenues have been decent right revenues have been somewhat stable the last quarter profit was also positive 184 and this was one of the best profits that they gave this was not the time when the corona second peak had impacted but now the numbers are coming in and the bank has made a loss again why because of this financing profit issue that i just explained so the point is that these small finance banks get impacted massively if they are not able to give out loans to their core customer base what is the core customer base if you don't understand it please watch my video from yesterday again linked here that will help you understand the entire functioning of small finance banks now the narrative for small finance bank b to g1 finance bank or equita small finance bank is very simple if you believe that the bottom 50th percentile in india will get more and more bank and they will avail more banking services you are betting on the right track i genuinely believe that there is a big population of india that is still unbanked approximately 20 25 they will get bank and they will be the first customers for small finance banks so that is a direct customer group that the small finance bank will be able to cater to now couple of very important points before you start investing your money in small finance bank number one this is the highest level of volatility that you will experience in the banking sector so if you are not an investor that is okay losing a little bit of money in the short term and you are okay in terms of understanding the overall economic scenario then only go and invest in these banks otherwise don't do it invest in stable banks like hdfc icici cortech mahindra pnb and our favorite sbi no i'm joking sbi is only a trading stock but if you are investing in india's growth especially the growth that will happen in the bottom 50th percentile of india then small finance bank can actually grow your portfolio quite a bit right so i am in so i am an investor i am currently sitting on a loss on achievement small finance bank i'm quite hopeful that it will turn green so not a problem from my side there are a lot of stocks in which i sit on temporary loss and then they skyrocket so not a problem there that's the first key thing it will go through a massive volatile journey so please be okay with that number two please keep a track of news now i can't tell you how important it is to keep a track of news especially with small finance bank because the news is deliberately manipulated especially in small finance banks right so it's very very important for you to get credible news from different sources and check it out so check out ticker tape from that angle this will help you understand more i put the links in the description box as well so these are some of the key fundamental things that you need to keep in mind so just to summarize what are some of the key banking stocks that i'm buying i'm a definite investor in punjab national bank i am investing both in hdfc and kotek mahindra and finally i am investing in both small finance banks equitab small finance and g1 small finance but i am investing in these different stocks for very different reasons for example i am betting on the bottom 50th percentile when i am investing in the small finance plan i am investing in the overall india's gdp when i am investing in hdfc or potek mahindra bank so that is the rationale with which i am investing so please do your due diligence and check out these stocks that's what i would leave you with so i hope you enjoyed the video press the like button and i will see you the next
2021-08-17 19:25
