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Deutsche Bank has turned more positive on State-run lenders, citing distress valuations which now factor low RoEs and extremely high credit costs perpetually.
It has upgraded Bank of India to "buy" from "hold" and Canara Bank to "hold" from "sell".
It has cited large underperformance, attractive valuations, and risk-reward as key reasons for the upgrade.
It has indicated a preference for larger names such as State Bank of India, Punjab National Bank, and Bank of Baroda.
It added the Government was focusing on improving governance in the lenders. It cited stock options and new blood as signs India's state banks were ready for change.
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