IOB - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

🧠 My Thought Process

You're asking for a full-spectrum fundamental analysis of Indian Overseas Bank (IOB), with a numeric rating and strategic investment guidance. I’ve weighed profitability, capital efficiency, valuation, and business durability, and factored in recent developments like its inclusion in the FTSE All-World Index

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📊 Fundamental Analysis of Indian Overseas Bank (IOB)

🔍 Core Financials

Profitability

PAT Qtr: ₹1,111 Cr vs ₹1,051 Cr — solid growth (↑75.6% YoY).

EPS: ₹2.00 — modest, but improving.

ROE: 11.0%, ROCE: 5.95% — decent, though below top-tier PSU banks.

Leverage & Liquidity

Debt-to-equity: 11.0 — high, typical for banks; manageable with improving asset quality.

Dividend Yield: 0.00% — no payouts yet, reinvestment-focused.

Cash Flow & Stability

Strong quarterly performance and improving operational efficiency.

Inclusion in the FTSE All-World Index from September 22, 2025, may attract passive inflows and institutional interest

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📉 Valuation Indicators

Metric Value Interpretation

P/E Ratio 20.3 Overvalued vs industry PE of 7.91

P/B Ratio ~2.3 High for a PSU bank, reflects optimism

PEG Ratio 0.81 Attractive — growth justifies valuation

Intrinsic Value ~₹35–₹38 Slightly below current price — limited upside

🏦 Business Model & Competitive Edge

Segment Focus: Retail, corporate, and international banking.

Moat: Legacy PSU status, wide branch network, and digital banking push.

Growth Drivers

Operational turnaround and improving profitability.

FTSE index inclusion boosts visibility and credibility

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Government support and potential PSU banking reforms.

📈 Technical & Entry Guidance

Current Price: ₹40.2

DMA 50/200: ₹38.7 / ₹42.4 — trading near resistance.

RSI: 62.1 — mildly overbought.

MACD: 0.61 — positive momentum.

🎯 Entry Zone

Ideal Buy Range: ₹36–₹39 — near DMA 50 support.

Stop Loss: ₹33

Target: ₹48–₹52 in medium term

🕰️ Long-Term Holding Outlook

Hold if invested: Improving fundamentals and index inclusion support long-term potential.

Buy on dips: Preferably near ₹38 zone.

Growth Triggers: Institutional inflows, asset quality improvement, and PSU sector tailwinds.

⭐ Fundamental Rating

3.9

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