PSU BANKS MAY OFFER STRONG MEDIUM-TERM ALPHA

OmniScience Capital remains overweight on the banking sector, including PSU banks, large private lenders and mid-cap private banks, citing stronger balance sheets, double-digit growth and attractive valuations. The firm believes India’s resilient domestic economy could support GDP growth of over 7% this fiscal year despite geopolitical uncertainties. According to OmniScience CEO Vikas Gupta, PSU banks offer the greatest medium-term alpha potential, with balance sheets among their strongest levels in decades and double-digit growth in assets and revenue. Despite this improvement, PSU lenders continue to trade at significant discounts to their estimated intrinsic value. The firm expects undervalued banking stocks to benefit from valuation re-rating as investors increasingly focus on future cash flows. While mid-cap private banks could see faster re-rating and potentially higher returns, OmniScience remains positive on the broader banking sector.