Speaking to ET Now, Bandyopadhyay said the valuation gap between PSU banks and private lenders remains significant and could narrow further, making current levels still attractive for long-term investors.
PSU banks: Valuation gap yet to close
Despite the recent surge in the PSU Banking Index, Bandyopadhyay believes the re-rating story is not over.
“There is still a meaningful valuation gap between PSU banks and private peers. I am not saying they will command the same valuation multiples as ICICI Bank or HDFC Bank, but the gap is too wide and will narrow to an extent,” he said.
He highlighted State Bank of India (SBI) as a core long-term portfolio candidate even after the rally. Improving asset quality, steady credit growth, strong subsidiary performance and potential value unlocking through listings of subsidiaries are key positives.
Other PSU names such as Bank of Baroda and Union Bank of India also look attractive, he added, citing improving return ratios and strong management commentary on credit growth.
With global uncertainties and AI-led disruptions affecting multiple sectors, Bandyopadhyay noted that banking — particularly PSU banks — remains relatively insulated.
Private banks: Selective opportunities
Between PSU and private lenders, he prefers PSUs at current levels. However, selective private banks are also showing promise.
Bandhan Bank, which faced asset quality stress due to microfinance exposure, is seeing “green shoots” of recovery. From a valuation standpoint, it could offer upside if improvements sustain.
Among large private banks, ICICI Bank remains a long-term favourite despite some one-off impacts in recent results.
“If I have to pick a second name, Axis Bank could see valuation catch-up given the gap versus ICICI and HDFC,” he said.
Metals: Secular upcycle intact despite volatility
On the metals space, Bandyopadhyay maintained a bullish stance, calling it a “secular upcycle” driven by global trends rather than India-specific factors.
Recent volatility in silver prices and pressure on stocks like Hindustan Zinc does not alter the long-term outlook, he said.
“These are globally traded commodities. Volatility is natural. But from a medium- to long-term perspective, metals remain a good place to be,” he added.
He also reiterated his positive view on Vedanta, citing ongoing demerger plans that could unlock shareholder value alongside the broader metal cycle.
Bottom line
For long-term investors who missed the PSU bank rally, Bandyopadhyay believes there is still room to enter selectively. Improving fundamentals, narrowing valuation gaps and strong credit growth support the sector’s outlook.
Similarly, despite short-term price swings, metals remain structurally strong — backed by global demand trends and corporate value-unlocking triggers.
In a market grappling with AI disruption and global uncertainty, he suggests focusing on sectors with visible earnings momentum and limited technological disruption risk.