01 — At a Glance
The Sleeping Giant Woke Up. Everyone Ignored It Anyway.
- 52-Week High / Low₹45.2 / ₹33.0
- Q3 FY26 Revenue (Standalone)₹8,172 Cr
- Q3 FY26 PAT (Standalone)₹1,365 Cr
- Q3 FY26 EPS (₹)₹0.71
- Annualised EPS (Q3×4)₹2.84
- Book Value₹13.90
- Price to Book2.45x
- GNPA %1.54%
- NNPA %0.24%
- Debt / Equity10.9x
The CFO’s Own Words (14 Jan 2026): “All-time high quarterly net profit of Rs.1,365 crores.” YoY profit jump: 56.18%. Gross advances growing 24%+. Deposits up 14%+. GNPA down 101 basis points YoY. Quarterly slippages at an unheard-of 0.11%. And yet… the stock returned -12.4% in the last 6 months. The valuation arbitrage is so thick, you could cut it with a khukri.
02 — Introduction
Meet the Bank That’s Healing Itself While Everyone Sleeps
Indian Overseas Bank is a 1937-vintage public sector bank that spent a decade getting absolutely wrecked. We’re talking losses in FY16 (₹-2,897 Cr), negative book value, and nine years under RBI’s Prompt Corrective Action (PCA) cage. Between FY15 and FY21, it was an accounting hospital visit on loop.
Then, the Government of India decided it had skin in the game. It pumped ₹27,634 crore in equity since FY15 — roughly the GDP of Montenegro. Now, GoI owns 92.44% (down from 95.84% in FY22). And here’s the kicker: the bank isn’t pretending to heal anymore. It’s actually healing. Record PAT. GNPA collapsed. ROE at 20.98% (up 312 bps YoY). Advances growing faster than deposits. This is not a turnaround story dressed up for investor day. This is a turnaround that’s actually turning.
But the stock has delivered -23.7% returns in the last year. Why? Because the market priced in either (a) the bank would fail, or (b) the bank would muddle along like other PSU banks. Neither happened. The market got confused. Valuations stayed locked in the basement.
Welcome to your contrarian PSU bank deep-dive. With all the sarcasm, data, and uncomfortable truths that label demands.
The Big Fact Nobody Mentions: In Q3 FY26, IOB’s net profit grew 56% YoY. SBI’s net profit grew 13%. The smaller bank is running circles around the giant. Market still values SBI at 13.02x P/E and IOB at 13.8x. If you think the gap should exist, you’re not thinking hard enough.
03 — Business Model: What Does a PSU Bank Even Do?
Collect Deposits. Lend Money. Pray The Borrowers Repay. Repeat.
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