Buy UCO Bank: Tulsian

Investment Advisor, SP Tulsian is of the view that UCO Bank, Dena Bank, Andhra Bank, Allahabad Bank they all are having a PE of 4-5 but amongst them also this is probably the cheapest available, restructuring of the equity as we have discussed by Rs 250 is a big booster for the bank. This qualifies as a buy at the current level.

Tulsian told CNBC-TV18, "In UCO Bank there has been a positive effect that was all expected from the government that they will be restructuring part of the equity; out of 800 crore they have restructured it 250. Earlier it was thought that probably government will convert 300 crore into preferring shares making the paid up equity at 500 crore but now it has remained at 550 – never mind because if you take the financial performance of the bank for the first two quarters they have reported a net profit of about 120-135 crore respectively for Q1 and Q2 and if I take the normal growth as just now we have discussed overall for the banking sector the bank should be able to post an EPS close to Rs 10; share is now ruling at Rs 31 definitely makes a PE multiple lowest amongst all the public sector banks."

He further added, "It’s true that even larger ones have a PE ratio of about 5-6% while the smaller ones like UCO Bank, Dena Bank, Andhra Bank, Allahabad Bank they all are having a PE of 4-5 but amongst them also this is probably the cheapest available, restructuring of the equity as we have discussed by Rs 250 is a big booster for the bank. This qualifies as a buy at the current level those who have been waiting for the stock to buy at the current levels."

Disclosure: The analyst has holdings in Shree Renuka, Hindalco, Ranbaxy.

Source: Moneycontrol