⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
IOB - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.7
| Stock Code | IOB | Market Cap | 66,202 Cr. | Current Price | 34.4 ₹ | High / Low | 52.4 ₹ |
| Stock P/E | 13.9 | Book Value | 18.8 ₹ | Dividend Yield | 0.00 % | ROCE | 5.95 % |
| ROE | 11.0 % | Face Value | 10.0 ₹ | DMA 50 | 36.2 ₹ | DMA 200 | 39.4 ₹ |
| Chg in FII Hold | 0.04 % | Chg in DII Hold | 1.96 % | PAT Qtr | 1,365 Cr. | PAT Prev Qtr | 1,226 Cr. |
| RSI | 42.2 | MACD | -0.39 | Volume | 93,12,585 | Avg Vol 1Wk | 77,43,170 |
| Low price | 33.0 ₹ | High price | 52.4 ₹ | PEG Ratio | 0.56 | Debt to equity | 10.9 |
| 52w Index | 6.91 % | Qtr Profit Var | 56.2 % | EPS | 2.47 ₹ | Industry PE | 7.64 |
📊 Core Financials
- Revenue & Profitability: PAT improved from 1,226 Cr. to 1,365 Cr. QoQ (+56.2%), showing strong earnings momentum.
- Margins: ROE at 11.0% is decent, while ROCE at 5.95% indicates modest efficiency in capital utilization.
- Debt: Debt-to-equity ratio of 10.9 is very high, reflecting significant leverage risk typical of PSU banks.
- Cash Flow: Dividend yield of 0.00% suggests no shareholder payout, limiting direct investor reward.
💹 Valuation Indicators
- P/E Ratio: 13.9 vs Industry PE of 7.64 → overvalued compared to peers.
- P/B Ratio: Current Price (34.4 ₹) / Book Value (18.8 ₹) ≈ 1.83, reasonable for a bank.
- PEG Ratio: 0.56 indicates attractive valuation relative to growth prospects.
- Intrinsic Value: Current price near support (33 ₹) suggests limited downside risk.
🏦 Business Model & Competitive Advantage
- Indian Overseas Bank (IOB) operates as a public sector bank with diversified lending across retail, corporate, and rural segments.
- Competitive advantage lies in government backing, wide branch network, and improving profitability.
- Overall health is stable, but high leverage and modest efficiency remain concerns.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive entry between 33 ₹ – 35 ₹, near support levels.
- Long-Term Holding: Suitable for investors seeking PSU banking exposure, but requires monitoring of debt levels and profitability trends.
✅ Positive
- Strong PAT growth (+56.2% QoQ).
- PEG ratio (0.56) suggests undervaluation relative to growth.
- DII holdings increased (+1.96%), showing strong domestic institutional support.
⚠️ Limitation
- High debt-to-equity ratio (10.9) reflects leverage risk.
- ROCE (5.95%) remains modest compared to private peers.
- No dividend yield, limiting shareholder reward.
📉 Company Negative News
- FII holdings increased only marginally (+0.04%), showing limited foreign investor interest.
- Stock trading below DMA 50 (36.2 ₹) and DMA 200 (39.4 ₹) indicates technical weakness.
📈 Company Positive News
- PAT improved QoQ, showing consistent profitability growth.
- DII holdings increased significantly, reflecting domestic confidence.
🏭 Industry
- Industry PE at 7.64 is lower than IOB’s PE, highlighting overvaluation.
- Banking sector growth driven by credit expansion, digital adoption, and government support.
- Competition from private banks remains strong, but PSU banks benefit from government backing.
🔎 Conclusion
- IOB shows improving profitability and strong domestic institutional support.
- Valuation is slightly stretched compared to industry peers, with high leverage risk.
- Best suited for long-term investors entering near 33–35 ₹, with monitoring of debt levels and efficiency improvements.