Rally in PSU banks to sustain on higher margins, loan surge: Morgan Stanley

Brokerage raises price targets for non-SBI state-owned banks

The Nifty PSU Bank index has gained over 60 per cent year-to-date, even as the Nifty has gained just six per cent. Morgan Stanley believes the rally in state-owned (SoE) banks has more legs to run on.

“SoE banks have done well, and we expect continued strong performance helped by higher margins, sustained loan growth and improving operating leverage over the next few years,” the US-based brokerage has said in a note.

It has raised price targets for SoE Banks by as much as 50 per cent.

The note said that over the past two years, Indian banks have seen