It is the day of the banking space as Nifty Bank jumped to an all-time high of 44,483.35. The index itself delivered a not-so-common gain of over 12% in 2 months. As some of you might be looking to beef up your portfolios with some strong banks, it is important not to ignore their current valuations.
In that vein, here are 2 banks on the NSE, that are currently trading at the cheapest valuations after taking their respective FY23 earnings into consideration. All these banks still have an upside potential of a minimum of 15%.
South Indian Bank Limited
South Indian Bank Ltd. (NS:SIBK) is a small-cap private-sector lender with a market capitalization of INR 3,547 crores. The stock more than doubled in the last 12 months, delivering a staggering return of 111.8%, however, due to a gigantic 1,629% YoY jump in net earnings to INR 775.31 crores, the valuations are still attractive.
In fact, it is currently the cheapest bank available to buy, trading at a P/E ratio of a mere 4.58. Its price-to-book value is even less than INR 1, with a P/B ratio of 0.61. The CMP of the stock is INR 17.05 and as per InvestingPro proprietary models, its fair value is around INR 24, projecting an upside potential of over 41%. Another interesting fact, FIIs have almost doubled their stake in South Indian Bank in 6 months, from 7.82% in September 2022 to 14.58% in March 2023.
The Jammu and Kashmir Bank Limited
The Jammu and Kashmir Bank Ltd. (NS:JKBK) has a market capitalization of INR 5,688 crores. It clocked its highest-ever annual revenue in FY23, at INR 10,120.47 crores and consequently net income surged 142.2% YoY to INR 1,198.59 crores. In the last 12 months, the stock soared by 82.9% to the CMP of INR 55.3.
However, still the P/E ratio is quite low, at only 4.75, while its P/B ratio is 0.7. The average of 3 InvestingPro financial models are projecting a decent upside of 15% to INR 63.75. In fact, the price to sales multiple model is even giving a bold target of INR 75.6. FIIs are also showing their confidence in this bank, as their stake has gone up by almost 3 times in the last 6 months, from 0.82% in September 2022 to 2.25% in March 2023.
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