The P/E ratio or Price-to-Earnings ratio compares the current share price to the earnings per share (EPS) of a company, which is a widely used metric for determining the worth of a stock.
A company with a lower P/E ratio outperforms its competitors with a higher P/E ratio, indicating that investors are paying less money for every dollar of earnings generated by a company. This method helps investors make informed decisions before investing in any company.
Following are the three private bank stocks with a market price of less than Rs. 300 that are currently trading at a lower P/E ratio than the industry average.
Karnataka Bank Limited
With a market cap of Rs. 8,595 crores, the share price of this small-cap stock moved up by 0.95 percent on BSE to hit an intraday high at Rs. 229.15 in the trading session of Friday.
The stock has a P/E ratio of 6.18, compared to the industry’s P/E ratio of 14.28, indicating that the stock is trading at a lower price or in other words, the stock is undervalued.
In terms of financials, the net profit of the bank increased by 0.3 percent from Rs. 330 crore in Q2FY24 to Rs. 331 crore in Q3FY24, while the net NPA increased by 0.19 percent from 1.36 percent to 1.55 percent during the same period.
The CASA ratio of Karnataka Bank stood at 32.97 percent in FY23, increasing by 0.01 percent to 32.96 percent in FY22.
In the last six months, the bank has delivered negative returns of about 3.50 percent and nearly 75 percent of positive returns in the last one year. So far in 2024, it has given negative returns of around 3.80 percent.
As of March 2024, FIIs hold 18.86 percent of the shares, whereas DIIs hold 23.06 percent of the shares in the Bank, aggregating to 41.92 percent of the institutional holdings.
Karnataka Bank is engaged in offering a wide range of banking and financial services including retail, corporate banking and para-banking activities along with treasury and foreign exchange business.
ESAF Small Finance Bank Limited
With a market cap of Rs. 3,178 crores, the share price of the stock jumped by 0.81 percent on BSE to Rs. 62.25 in the trading session of Friday, compared to its previous closing price of Rs. 61.72.
The P/E ratio of the bank is 6.57, which is lower than the industry’s P/E ratio of 15.36, indicating that the stock is trading at a lower price or in other words, the stock is undervalued.
In terms of financials, the net profit of the bank decreased by 20 percent from Rs. 140 crore in Q2FY24 to Rs. 112 crore in Q3FY24, while the net NPA increased by 1 percent from 1.19 percent to 2.19 percent during the same period. The CASA ratio of ESAF Small Finance Bank stood at 21.39 percent in FY23.
In the last six months, the bank has delivered negative returns of about 10.50 percent. So far in 2024, it has given negative returns of around 10.30 percent.
As of March 2024, FIIs hold 0.81 percent of the shares, whereas DIIs hold 10.26 percent of the shares in the Bank, aggregating to 11.07 percent of the institutional holdings.
Incorporated in 1992, ESAF is a Small Finance Bank primarily focusing on offering loans to rural and semi-urban customers.
South Indian Bank Limited
With a market cap of Rs. 7,950 crores, the share price of this bank stock moved up by 1.42 percent on BSE to hit an intraday high at Rs. 30.80 in the trading session of Friday, compared to its previous closing price of Rs. 30.37.
The P/E ratio of South Indian Bank stands at 7.11 which is less than the industry’s P/E ratio of 14.28.
In terms of financials, the net profit of the bank increased by 11.3 percent from Rs. 274 crore in Q2FY24 to Rs. 305 crore in Q3FY24, while the net NPA decreased by 0.09 percent from 1.7 percent to 1.61 percent during the same period. The CASA ratio of SIB stood at 32.97 percent in FY23, decreasing by 0.23 percent to 33.2 percent in FY22.
As of March 2024, FIIs hold 15.17 percent of the shares, whereas DIIs hold 4.61 percent of the shares in the Bank, aggregating to 19.78 percent of the institutional holdings.
In the last six months, the bank has delivered positive returns of about 37 percent and multibagger returns of nearly 110 percent in the last one year. So far in 2024, it has given positive returns of around 23 percent.
Established in 1929, South Indian Bank was the first ‘scheduled bank’ amongst the private banks in Kerala. The bank provides retail and corporate banking, para-banking activities like debit cards, and third-party financial product distribution, along with Treasury and Foreign Exchange Business.
Written by Shivani Singh
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