Kotak and Indusind Bank to SBI Ratio at 3.8 target 5

Based on Fy25 numbers:
# Kotak @ 1800 is trading at 2.3 time book value assuming 790/share in networth
# Indusind bank @ 1300 is trading at 1.45 times book at assuming 900/share in networth.
# SBI at 815 trading at 1.5 time book value assuming 540 / share networth.
# Kotak + Indusind trading at average PBV of 1.85 times.
# (Kotak+Indusind) / SBI is trading at 3.81 as on 21st Oct 2024.


# The trade is to buy 6,50,000 worth of shares of Kotak and Indusind (50% each) and short 1 futures contract of SBI. The max down side is when both share start trading at 1.5 times combined PBV implying a downside of max 20% (1.85 to 1.5). This seems less likely.

# Ideally the combined PBV of kotak and indusind should trade at 3+2 (2.5) times PBV while SBI should trade at 1.5 times (66.7% more).

# since at 1.85 time combined PBV of Kotak and Indusind is trading at 23.5% premium to SBI, the trade can be closed when the gap reaches 60% premium which implies the Ratio reaches 5.