IDBI - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.8
| Stock Code | IDBI | Market Cap | 78,116 Cr. | Current Price | 72.6 ₹ | High / Low | 118 ₹ |
| Stock P/E | 8.21 | Book Value | 62.9 ₹ | Dividend Yield | 2.89 % | ROCE | 6.58 % |
| ROE | 14.9 % | Face Value | 10.0 ₹ | DMA 50 | 78.3 ₹ | DMA 200 | 88.9 ₹ |
| Chg in FII Hold | 0.04 % | Chg in DII Hold | -0.04 % | PAT Qtr | 1,943 Cr. | PAT Prev Qtr | 1,935 Cr. |
| RSI | 44.8 | MACD | -1.33 | Volume | 36,65,399 | Avg Vol 1Wk | 99,08,853 |
| Low price | 61.0 ₹ | High price | 118 ₹ | PEG Ratio | 0.22 | Debt to equity | 5.55 |
| 52w Index | 20.2 % | Qtr Profit Var | -5.27 % | EPS | 8.85 ₹ | Industry PE | 14.4 |
📊 Financials: IDBI Bank reports quarterly PAT of ₹1,943 Cr, showing stability but limited growth (-5.27% variation). ROE at 14.9% is strong, while ROCE at 6.58% highlights inefficiency in capital use. Debt-to-equity ratio of 5.55 indicates heavy leverage risk. EPS of ₹8.85 supports earnings consistency, though cash flow strength remains tied to restructuring progress.
💹 Valuation: P/E ratio of 8.21 is well below industry average (14.4), suggesting undervaluation. Book value at ₹62.9 vs current price ₹72.6 shows fair pricing. PEG ratio of 0.22 reflects strong growth potential relative to earnings. Dividend yield of 2.89% provides steady income, enhancing investor appeal.
🏦 Business Model: IDBI operates as a government-backed bank with a focus on retail and corporate lending. Its competitive advantage lies in legacy presence and restructuring support. However, high leverage and weaker efficiency metrics limit flexibility compared to private peers.
📈 Entry Zone: Attractive entry between ₹61–68, near support levels. Current price is slightly above book value, offering limited downside. Long-term holding is viable if debt restructuring continues and profitability stabilizes.
Positive
- ✅ Strong ROE of 14.9% supports shareholder returns.
- ✅ Low P/E compared to industry average indicates undervaluation.
- ✅ Dividend yield of 2.89% adds income stability.
Limitation
- ⚠️ High debt-to-equity ratio (5.55) increases financial risk.
- ⚠️ ROCE of 6.58% shows weak capital efficiency.
- ⚠️ Profit variation (-5.27%) reflects earnings inconsistency.
Company Negative News
- 📉 Asset quality concerns remain due to legacy issues.
- 📉 Weak quarterly profit growth compared to peers.
Company Positive News
- 📈 Government support ensures credibility and stability.
- 📈 Digital adoption and retail banking expansion improving footprint.
Industry
- 🏦 Banking sector P/E at 14.4 reflects stronger valuations.
- 🏦 Private banks show better efficiency and profitability.
- 🏦 Regulatory reforms improving transparency and asset quality.
Conclusion
🔎 IDBI Bank is undervalued relative to peers, with strong ROE and dividend yield. However, high leverage and weak ROCE limit upside potential. Entry near ₹61–68 offers a margin of safety. Long-term holding is suitable only if debt restructuring progresses and profitability stabilizes.
If you’d like, I can also prepare a side-by-side comparison of IDBI with SBI or ICICI to highlight how it stacks up against stronger peers in the banking sector.