Sector guides
What to look for in banking stocks
A sector starter: the metrics that matter for Indian banks — and the ones beginners overrate.
Banks are not normal “P/E factories.” Their raw material is credit risk.
A bank borrows money (deposits/liabilities) and lends money (assets). Profit comes from the spread — minus credit losses, opex, and tax.
Must-look metrics
- Asset quality — GNPA / NNPA trends
- Credit cost — provisioning burden through the cycle
- NIM — net interest margin sustainability
- Deposit franchise — CASA quality, funding stability
- PCR — provision coverage ratio
- Growth vs underwriting — is loan growth bought with risk?
Don’t overweight alone
- A “cheap” P/E after a bad cycle (or at the wrong point in the cycle)
- One quarter of sparkling profit without credit-cost context
- Tip culture around “PSU bank momentum” without balance-sheet reading
Simple healthy vs sick lens
Healthier tone: stable/improving asset quality, sensible growth, strong liability franchise.
Sicker tone: rising slippages, aggressive growth, weak deposit mix, thin coverage.
Reminder
Sector guides change with regulation and cycle. Re-check current filings; don’t memorize forever-numbers.
Educational only. Not SEBI-registered research or a recommendation.
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