MFs' stake hike highest in HDFC Bank in Q4 FY24, shed PSBs
Analysts are of the view private banks stand a chance to give handsome returns from here on due to the valuation comfort.
Mutual funds have raised their stake in India’s larget private sector lender HDFC Bank in the fourth quarter (Q4) of financial year 2023-24 (FY24), news daily Business Standard, citing Capitaline data, said. The domestic Asset Management Companies (AMCs) have raised stake in other private banks as well in the said quarter, after booking profit in public sector banks (PSBs). Mutual Fund industry experts reasoned valuation comfort in private bank space apart from stretched valuations of public banks behind their step. According to the publication, mutual funds have been net sellers of PSBs for the last three quarters straight.
MFs’ stake in the HDFC Bank has increased to 20 per cent in Q4 FY24 from 15.1 per cent in the preceding quarter. Other private banks in which the AMCs hiked stake in March quarter are the likes of ICICI Bank, Axis Bank, IndusInd Bank and Kotak Mahindra Bank. While, MFs trimmed stakes in public banks like SBI, BoB and PNB.
MFs raise stake in private banks in Q4 FY24:
| Private Bank | Q4 FY24 (%) | Q3 FY24 (%) |
| HDFC Bank | 20 | 15.1 |
| ICICI Bank | 23.9 | 23.7 |
| Axis Bank | 21.9 | 23.1 |
| IndusInd Bank | 16.4 | 14.4 |
| Kotak Mahindra Bank | 12.8 | 11.0 |
MFs pare stake in PSBs in Q4 FY24:
| PSBs | Q4 FY24 | Q3 FY24 |
| SBI | 11.5 | 12.9 |
| BoB | 8.6 | 10.1 |
| PNB | 3.4 | 4.6 |
According to industry experts, after sharp rally in share prices of PBS stocks since the Covid-19 pandemic, valuations of small size PSBs have become stretched. While, that of large-size banks have reached a fair zone.
Business Standard quoted Mirae Asset Investment Managers, fund manager, Gaurav Kochar, “PSBs were attractive from the valuation point of view post covid, leading to higher allocation. Now that most of the re-rating is done, there has been some cut in exposure. Further re-rating from here on would require improved financial performance to sustain. At the same time, the private bank stocks are available at valuations near to their long term average, and are expected to do better in the medium to longer term.”
The NSE PSU Bank index has rallied 79 per cent in last one year. While, the Nifty Private Bank index has risen only 11 per cent in as many days. But now analysts are of the view private banks stand a chance to give handsome returns from here on due to the valuation comfort.