IDBI - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.9

📊 Core Financials:

- Quarterly PAT at ₹3,627 Cr vs ₹2,007 Cr previously → strong growth (97.5% variation).

- ROCE at 6.76% and ROE at 13.6% → moderate efficiency.

- Debt-to-equity ratio at 4.87 → high leverage, typical for banks.

- Cash flows supported by lending operations, dividend yield at 2.14% adds investor appeal.

💹 Valuation Indicators:

- Current P/E: 11.0 vs Industry P/E: 14.7 → undervalued compared to peers.

- P/B ratio: ~1.57 (₹98.5 / ₹62.6) → reasonable.

- PEG ratio: 0.24 → highly attractive, suggests undervaluation relative to growth.

- Intrinsic value appears higher than CMP, indicating undervaluation.

🏢 Business Model & Competitive Advantage:

- IDBI Bank operates in retail and corporate banking with government backing.

- Competitive advantage lies in institutional support, restructuring efforts, and focus on improving asset quality.

- Market cap of ₹1,05,911 Cr reflects significant presence in the Indian banking sector.

📈 Entry Zone & Long-Term Guidance:

- CMP ₹98.5 is near DMA 50 (₹97.6) and above DMA 200 (₹92.3), showing stability.

- RSI at 48.0 and MACD neutral → balanced momentum.

- Suggested entry zone: ₹92–₹98.

- Long-term holding recommended for value investors, though leverage and efficiency ratios need monitoring.

Positive

• Undervalued compared to industry P/E (11.0 vs 14.7).
• PEG ratio of 0.24 indicates strong undervaluation relative to growth.
• Dividend yield of 2.14% provides steady returns.
• Quarterly PAT growth of 97.5% shows strong turnaround momentum.

Limitation

• High debt-to-equity ratio (4.87).
• ROCE (6.76%) is relatively weak.
• Operational efficiency still below top-tier banks.

Company Negative News

• FII holdings reduced by -0.07%.
• DII holdings reduced by -0.04%.

Company Positive News

• Quarterly PAT improved significantly from ₹2,007 Cr to ₹3,627 Cr.
• Strong EPS growth at ₹8.92.

Industry

• Banking industry is growing with strong demand for retail and corporate credit.
• Industry P/E at 14.7 indicates sector is moderately valued compared to IDBI’s lower P/E of 11.0.

Conclusion

⚖️ IDBI Bank shows strong profit growth and undervaluation on P/E and PEG metrics. While dividend yield adds investor appeal, high leverage and moderate efficiency ratios remain concerns. Entry is favorable around ₹92–₹98 for long-term investors, with potential for value unlocking as restructuring and profitability improve.