Check Before You Invest : Indian Overseas Bank

BSE: 532388 NSE: IOB ISIN: INE565A01014

| Sector: BFSI | Industry: Bank - Public

Snapshot

Q.1 Which industry/sub-sector does Indian Overseas Bank belong to?

Indian Overseas Bank belongs to the BFSI sector, operating specifically within the Bank - Public segment.

Q.2 Is Indian Overseas Bank a good quality company?

Indian Overseas Bank is a weak quality company, based on a inconsistent 10-year financial track record.

Q.3 Is Indian Overseas Bank undervalued or overvalued?

Indian Overseas Bank appears Fair, as its key valuation ratios are in line with their past averages.

Q.4 Is Indian Overseas Bank a good buy now?

Indian Overseas Bank is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

Q.1 Total Income growth of Indian Overseas Bank?

Indian Overseas Bank Total Income growth is 13.36% for FY-2025, which is above its 5-year CAGR of 10.15%, indicating faster growth.

Q.2 Return on Assets of Indian Overseas Bank?

Indian Overseas Bank Return on Asset is 0.9%, which is above its 5-year historical median of 0.7%, indicating improved earnings on assets.

	Current Level	5-year Historic Median
NIM%	2.88	2.82
PPOP%	28.44	13.85
RoA%	0.9	0.7

Q.3 Return on Equity (ROE) of Indian Overseas Bank?

Indian Overseas Bank Return on Equity is 12.3% for FY-2025, which is above its 5-year historical median of 9.8%, indicating the business is making better use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of Indian Overseas Bank?

Indian Overseas Bank Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 28.44% for FY-2025, which is above its 5-year median(13.85%), indicating increasing margins.

Q.5 Net Interest Margin of Indian Overseas Bank?

Indian Overseas Bank Net Interest Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 2.88% for FY-2025, which is above its 5-year median( 2.82%), indicating increasing margins.

Q.6 Total Asset growth of Indian Overseas Bank?

Indian Overseas Bank Total Asset growth is 12.21% for FY-2025, which is above its 5-year CAGR of 8.66%, indicating faster growth.

Q.7 Cost to Income ratio of Indian Overseas Bank?

Indian Overseas Bank Cost to Income ratio which represents the cost incurred for every Rs.100 earned is 47.1% for FY-2025, is lower its historical 5-year median of 48.6%, indicating deteriorated cost management.

Q.8 Capital Adequacy ratio of Indian Overseas Bank?

Indian Overseas Bank Capital Adequacy ratio (CAR) is 19.7% for FY-2025, which is above the regulatory requirement of 12%, indicating strong capital position.

Q.9 Asset Quality of Indian Overseas Bank?

Indian Overseas Bank Gross Non-Performing Assets, which are loans overdue by more than 90 days, is 2.14% for FY-2025, which is below its 5-year median 7.44%, while Net Non-Performing Assets, which is GNPA minus provisions made for bad loans is 0.37% which is below its 5-year median( 1.83%), indicating improving asset quality.

Ownership & governance

Q.1 Promoter shareholding and pledge status of Indian Overseas Bank?

Promoters hold 92.44% of the Indian Overseas Bank, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

Q.1 AUM Growth of Indian Overseas Bank vs Industry Peers?

Indian Overseas Bank AUM CAGR is 8.66%, compared to the 5-year industry median CAGR of 9.37%, indicating slower growth and losing its market share.

Q.2 Profit metrics (NIM, PPOP, RoA) of Indian Overseas Bank vs industry peers

Indian Overseas Bank profit metrics are above the industry median level of 6.24%, indicating stronger profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NIM%	2.88	2.73
PPOP%	28.44	15.38
RoA%	0.9	0.6

Q.3 Operating efficiency of Indian Overseas Bank vs industry peers?

Indian Overseas Bank Cost to Income (54.1) is above the industry median of (50.2); while the current ROE (9.8) are above than the 5-year average Industry ROE (8.7). This shows that the business is positioned in the top quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NIM%	2.88	2.73
PPOP%	28.44	15.38
RoA%	0.9	0.6
Cost to Income%	47.1	50.2
ROE%	12.3	8.7

Valuation & price assessment

Q.1 Stock return of Indian Overseas Bank over the last decade?

Over the last 9 years, the stock has delivered a CAGR of 1.7% based on the current price.

Q.2 What return has the stock given over the last decade?

	9Y	5Y	3Y	1Y
Share Price CAGR	1.7%	17.3%	12.1%	-0.2%

Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	13.01	26.67	10.62
Price to Book	1.99	2.33	1.12
Price to Sales	2.12	2.57	1.15
EV to EBITDA	9.16	9.19	5.03

Q.4 Valuation ratios of Indian Overseas Bankvs historical and industry averages?

The current Price to book ratio (P/B) 1.99% is lower than its historical median of 2.33%, indicating that at the current price the stock is undervalued. However, you need a deeper analysis to make a better judgement.

Strategic outlook

Q.1 Does its ROIC exceed its WACC?

Indian Overseas Bank return on invested capital (ROIC) is 23.15% for FY-2025, is higher than its estimated weighted average cost of capital (WACC) of 11.25%, indicating value creation.

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