Goldman Sachs Turns Bearish On PSU Banks, Telecom

Goldman Sachs has turned bearish on government-owned banks after most of them suffered record losses in the three months to March 2018.

“We downgrade PSU banks to ‘Marketweight’ on the back of soft fourth quarter results,” the brokerage firm said. Goldman Sachs, however, retains ‘overweight’ on private lenders on account of their market share gains from state-owned peers.

Public sector banks reported a combined loss of over Rs 50,000 crore in the quarter ended March, led by Punjab National Bank that suffered a net loss of over Rs 13,400 crore, followed by State Bank of India at Rs 7,718 crore.

Underweight On Telecom

The brokerage is bearish on the telecom sector on rising uncertainties over tariffs after the introduction of new plans by Reliance Jio.

“We downgrade telcos to ‘Underweight’ given sluggish growth, declining average revenue per user and still persistent tariff-uncertainties,” the brokerage said.

Overweight On India

Goldman Sachs has maintained an ‘Overweight’ stance on the Indian market even as it cut its earnings guidance for 2018.

Incorporating the banks’ losses in the first quarter of calendar year 2018, we lower our current year earnings per share growth by 2 percentage points to 14 percent, it said.

The brokerage, however, retained its next year growth forecast of 18 percent, “partly aided by a lower 2018 base in banks”.