The bank's performance was underpinned by sustained credit expansion, stable asset quality metrics, and consistent margin management. With net interest income climbing to ₹3,247.96 crores in Q2 FY26 and operating profit before provisions reaching ₹2,574.74 crores, the lender continues to demonstrate operational resilience in a competitive banking landscape.
The quarter's results mark the bank's eighth consecutive quarter of positive financial momentum, reflecting management's disciplined approach to loan book expansion, cost containment, and credit risk management. Advances grew to ₹236,083.80 crores as of March 2025, whilst deposits expanded to ₹307,120.30 crores, providing a stable funding base for continued growth.
Financial Performance: Steady Profit Momentum Amidst Revenue Growth
Bank of Maharashtra's Q2 FY26 financial performance showcased balanced growth across key income streams. Interest earned rose to ₹7,128.36 crores in Q2 FY26, representing an 18.45% year-on-year increase from ₹6,017.41 crores in Q2 FY25. Sequentially, interest income grew by a modest 1.05% from ₹7,053.98 crores in Q1 FY26, indicating stable lending momentum.
Net interest income—the core earnings metric for banks—stood at ₹3,247.96 crores in Q2 FY26, marginally declining by 1.34% quarter-on-quarter from ₹3,292.07 crores in Q1 FY26, but registering a healthy 15.70% year-on-year expansion from ₹2,807.11 crores in Q2 FY25. This sequential dip in NII was primarily attributable to a faster rise in interest expenses, which increased to ₹3,880.40 crores in Q2 FY26 from ₹3,761.91 crores in the previous quarter, reflecting heightened deposit competition and rising cost of funds.
| Quarter | Interest Earned (₹ Cr) | Net Interest Income (₹ Cr) | Net Profit (₹ Cr) | YoY Growth (%) |
|---|---|---|---|---|
| Sep'25 | 7,128.36 | 3,247.96 | 1,633.50 | +23.09% |
| Jun'25 | 7,053.98 | 3,292.07 | 1,593.09 | +23.13% |
| Mar'25 | 6,730.82 | 3,116.81 | 1,493.38 | +22.61% |
| Dec'24 | 6,324.68 | 2,943.65 | 1,406.73 | +35.84% |
| Sep'24 | 6,017.41 | 2,807.11 | 1,327.08 | +44.27% |
| Jun'24 | 5,874.68 | 2,799.44 | 1,293.68 | +46.60% |
| Mar'24 | 5,466.73 | 2,584.64 | 1,217.91 | +44.91% |
| Dec'23 | 5,171.50 | 2,466.08 | 1,035.69 | +33.62% |
Operating profit before provisions reached ₹2,574.74 crores in Q2 FY26, virtually flat at 0.17% quarter-on-quarter from ₹2,570.40 crores in Q1 FY26, but up 16.90% year-on-year from ₹2,202.37 crores in Q2 FY25. Profit before tax climbed to ₹1,818.86 crores in Q2 FY26, marking a 6.80% sequential increase and a 31.77% year-on-year surge. Tax expenses rose to ₹185.36 crores in Q2 FY26 from ₹109.90 crores in Q1 FY26, resulting in the final net profit figure of ₹1,633.50 crores.
Profit margins remained robust, with net profit margin at 23.41% in Q2 FY26, whilst operating profit margin stood at 68.09%. These metrics underscore the bank's ability to maintain profitability despite rising funding costs and competitive pressures in the banking sector.
Asset Quality: Best-in-Class NPA Metrics Sustain Competitive Edge
Asset quality remains a standout feature of Bank of Maharashtra's performance. Gross non-performing assets (NPAs) stood at 1.72% as of September 2025, marginally improving from 1.74% in June 2025 and significantly better than the 1.84% recorded in September 2024. Net NPAs remained exceptionally low at 0.18%, unchanged quarter-on-quarter and demonstrating the bank's superior credit underwriting standards.
The consistent reduction in gross NPA ratios over the past three years—from 2.94% in December 2022 to 1.72% currently—reflects rigorous recovery efforts and prudent loan origination practices. This trajectory positions Bank of Maharashtra favourably amongst public sector banks, where asset quality concerns have historically weighed on profitability.
Asset Quality Leadership
With gross NPAs at 1.72% and net NPAs at a mere 0.18%, Bank of Maharashtra boasts one of the cleanest balance sheets in the public sector banking space. The bank's ability to maintain such low slippage ratios whilst growing advances by over 17% year-on-year speaks to disciplined risk management and effective collection mechanisms.
Return on equity (ROE) stood at an impressive 19.27% in Q2 FY26, indicating strong capital efficiency and profitability. This high ROE—well above the industry average—demonstrates the bank's ability to generate superior returns on shareholder capital, a critical metric for investors evaluating banking stocks. Return on assets (ROA) was recorded at 1.50%, reflecting efficient asset utilisation and strong earnings generation relative to the bank's asset base.
Balance Sheet Strength: Robust Capital Position Supports Growth
Bank of Maharashtra's balance sheet as of March 2025 showcased significant expansion. Shareholder funds increased to ₹28,707.98 crores from ₹19,870.62 crores in March 2024, driven by retained earnings and capital infusion. Deposits grew to ₹307,120.30 crores from ₹270,726.42 crores, representing a 13.45% year-on-year increase, whilst advances expanded to ₹236,083.80 crores from ₹200,239.88 crores, marking an 17.90% growth.
Borrowings surged to ₹23,852.52 crores as of March 2025 from ₹7,718.86 crores in the previous year, reflecting strategic liquidity management and funding diversification. The bank's loan-to-deposit ratio remained healthy, indicating balanced growth between asset and liability sides of the balance sheet.
Book value per share stood at ₹34.86, providing a solid foundation for the current market price of ₹59.30. With a price-to-book ratio of 1.41x, the stock trades at a reasonable premium to book value, reflecting investor confidence in the bank's earnings trajectory and asset quality.
Peer Comparison: Competitive Positioning in Public Sector Banking
When benchmarked against public sector banking peers, Bank of Maharashtra demonstrates competitive strengths across multiple dimensions. Its price-to-book ratio of 1.41x is higher than Bank of India's 0.71x and Central Bank of India's 0.89x, but lower than Indian Overseas Bank's 2.20x, reflecting a balanced valuation relative to asset quality and profitability metrics.
| Bank | P/BV (x) | Div Yield (%) | ROA (%) | Net NPA (%) | Gross NPA (%) |
|---|---|---|---|---|---|
| Bank of Maharashtra | 1.41 | 2.72% | 1.58% | 0.18% | 1.72% |
| Bank Of India | 0.71 | 3.22% | 0.92% | 0.75% | 2.92% |
| UCO Bank | 1.21 | 0.97% | 0.68% | 0.45% | 2.63% |
| Indian Overseas Bank | 2.20 | 0.00% | 0.92% | 0.32% | 1.97% |
| Central Bank of India | 0.89 | 0.82% | 0.94% | 0.49% | 3.13% |
Bank of Maharashtra's ROA of 1.58% significantly outpaces peers, with Bank of India, UCO Bank, Indian Overseas Bank, and Central Bank of India recording ROAs between 0.68% and 0.94%. This superior profitability metric justifies the bank's valuation premium and highlights operational efficiency.
Asset quality metrics further reinforce the bank's competitive positioning. Its gross NPA ratio of 1.72% is the second-lowest in the peer group after Indian Overseas Bank's 1.97%, whilst its net NPA ratio of 0.18% is the absolute lowest, underscoring best-in-class credit risk management. The dividend yield of 2.72% provides income-seeking investors with an attractive return profile, second only to Bank of India's 3.22% amongst the peer set.
Valuation Analysis: Attractive Entry Point for Long-Term Investors
At the current market price of ₹59.30, Bank of Maharashtra trades at a price-to-earnings ratio of 7.29x based on trailing twelve-month earnings, representing a significant discount to broader market multiples. The price-to-book ratio of 1.41x reflects a modest premium to book value, justified by the bank's superior ROE of 19.27% and pristine asset quality.
The stock's PEG ratio of 0.37x suggests the valuation is attractive relative to earnings growth potential. With consistent profit growth over the past eight quarters and expanding loan book, the bank's earnings trajectory remains on a positive footing. The dividend yield of 2.72% adds an income component to the total return proposition, making it appealing for conservative investors seeking stable cash flows.
The stock currently trades 1.59% below its 52-week high of ₹60.26 and 55.60% above its 52-week low of ₹38.11, indicating strong upward momentum over the past year. The overall valuation assessment remains "Very Attractive," with the bank's fundamentals supporting current price levels and offering scope for further appreciation as earnings growth continues.
Shareholding Pattern: Stable Government Ownership with Rising Institutional Interest
Bank of Maharashtra's shareholding structure reflects its status as a government-owned public sector bank. Promoter holding—represented by the President of India—stood at 79.60% as of June 2025, unchanged from the previous quarter but down from 86.46% in September 2024 following a strategic divestment.
| Shareholder Category | Jun'25 | Mar'25 | Dec'24 | QoQ Change |
|---|---|---|---|---|
| Promoter | 79.60% | 79.60% | 79.60% | 0.00% |
| FII | 1.89% | 1.73% | 1.53% | +0.16% |
| Mutual Funds | 0.97% | 0.90% | 0.85% | +0.07% |
| Insurance | 8.40% | 8.65% | 8.69% | -0.25% |
| Other DII | 1.03% | 1.12% | 1.34% | -0.09% |
| Non-Institutional | 8.11% | 8.00% | 7.99% | +0.11% |
Foreign institutional investor (FII) holdings increased to 1.89% in June 2025 from 1.73% in March 2025, signalling growing international confidence in the bank's prospects. Mutual fund holdings also rose to 0.97% from 0.90%, with the number of mutual funds holding the stock increasing from 22 to 23, indicating broader domestic institutional participation.
Insurance company holdings declined marginally to 8.40% from 8.65%, whilst other domestic institutional investor holdings decreased to 1.03% from 1.12%. Non-institutional holdings edged up to 8.11% from 8.00%, reflecting retail investor interest. Importantly, there is no promoter pledging, eliminating concerns about leverage at the ownership level.
Stock Performance: Outperformance Across Multiple Timeframes
Bank of Maharashtra's stock has delivered impressive returns across various timeframes, significantly outperforming the benchmark Sensex. Over the past year, the stock generated a return of 9.05% compared to the Sensex's 0.96%, delivering an alpha of 8.09%. The outperformance becomes even more pronounced over longer periods.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | 4.62% | 1.02% | +3.60% |
| 1 Month | 8.31% | 1.00% | +7.31% |
| 3 Months | 3.67% | 0.04% | +3.63% |
| 6 Months | 28.80% | 7.65% | +21.15% |
| YTD | 13.60% | 5.72% | +7.88% |
| 1 Year | 9.05% | 0.96% | +8.09% |
| 3 Years | 230.36% | 42.62% | +187.74% |
| 5 Years | 443.54% | 107.93% | +335.61% |
The three-year return of 230.36% versus the Sensex's 42.62% translates to an alpha of 187.74%, whilst the five-year return of 443.54% against the Sensex's 107.93% represents an alpha of 335.61%. These exceptional long-term returns reflect the bank's successful turnaround from legacy asset quality issues and sustained operational improvements.
Recent momentum has been particularly strong, with the stock gaining 28.80% over the past six months compared to the Sensex's 7.65% gain, delivering an alpha of 21.15%. Including dividend returns, the six-month total return stands at 32.06%, whilst the one-year total return reaches 11.81%.
"With a five-year alpha of over 335%, Bank of Maharashtra has transformed from a troubled public sector lender into a high-performing banking franchise, rewarding patient investors with exceptional returns."
The stock's beta of 1.20 indicates it is moderately more volatile than the broader market, moving approximately 20% more than market fluctuations. This medium beta classification suggests the stock can amplify both gains and losses relative to the benchmark, making it suitable for investors with moderate risk tolerance.
Technical Analysis: Bullish Momentum Signals Further Upside
Bank of Maharashtra's technical indicators have turned decisively bullish following the strong quarterly results. The stock shifted from a "Mildly Bullish" trend to "Bullish" on 15 October 2025, coinciding with the 7.47% surge to ₹59.30. The stock is currently trading above all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—indicating strong technical support across multiple timeframes.
Weekly MACD signals remain bullish, whilst monthly Bollinger Bands show a bullish configuration, suggesting continued upward momentum. The On-Balance Volume (OBV) indicator is bullish on both weekly and monthly charts, confirming that the recent price gains are supported by healthy trading volumes. Delivery volumes have surged by 155.60% over the past month, indicating genuine buying interest rather than speculative trading.
The stock faces immediate resistance at the 52-week high of ₹60.26, which it briefly touched during intraday trading on 15 October 2025. Support levels are well-established at ₹56.40 (20-day moving average), ₹54.99 (50-day moving average), and ₹52.26 (200-day moving average), providing a cushion against potential profit-booking.
Investment Thesis: Quality Bank with Compelling Risk-Reward
Bank of Maharashtra presents a compelling investment case built on four key pillars: attractive valuation, good quality fundamentals, positive financial trends, and supportive technical momentum. The bank's proprietary Mojo score of 74 out of 100 translates to a "BUY" rating, reflecting balanced strengths across multiple evaluation parameters.
The bank's quality grade has been rated "Good" for the past ten consecutive quarters since March 2023, demonstrating sustained operational excellence and financial discipline. The financial trend has been positive for eight consecutive quarters since September 2023, with Q2 FY26 marking the highest quarterly net profit at ₹1,633.50 crores and highest earnings per share at ₹2.12.
The primary strength lies in the bank's attractive valuation metrics, with a P/E ratio of 7.29x and P/BV ratio of 1.41x offering significant upside potential compared to broader market multiples. The ROE of 19.27% indicates strong capital efficiency, justifying the modest premium to book value. Asset quality metrics—gross NPA of 1.72% and net NPA of 0.18%—rank amongst the best in the public sector banking space, reducing credit risk concerns.
Key Strengths & Risk Factors
Key Strengths
- Best-in-Class Asset Quality: Gross NPA at 1.72% and net NPA at 0.18% represent industry-leading credit metrics amongst public sector banks.
- Strong Profitability Metrics: ROE of 19.27% and ROA of 1.58% significantly outpace peer group averages, demonstrating superior capital efficiency.
- Consistent Earnings Growth: Eight consecutive quarters of positive financial performance with Q2 FY26 net profit reaching ₹1,633.50 crores.
- Attractive Valuation: P/E ratio of 7.29x and P/BV ratio of 1.41x offer compelling entry points relative to growth and quality metrics.
- Robust Balance Sheet: Shareholder funds of ₹28,707.98 crores and growing deposit base of ₹307,120.30 crores provide strong capital foundation.
- Dividend Income: Yield of 2.72% adds income component to total return proposition for conservative investors.
- Technical Momentum: Bullish trend with stock trading above all key moving averages and strong delivery volumes.
Key Concerns
- Rising Funding Costs: Interest expenses increased to ₹3,880.40 crores in Q2 FY26, pressuring net interest margins.
- Sequential NII Decline: Net interest income declined 1.34% quarter-on-quarter, reflecting competitive deposit market dynamics.
- Public Sector Ownership: Government holding of 79.60% limits strategic flexibility and exposes the bank to policy-driven decisions.
- Limited Free Float: With promoter holding at 79.60%, only 20.40% of shares are available for public trading, potentially impacting liquidity.
- Sector Headwinds: Public sector banks face structural challenges including slower decision-making and legacy issues.
- Concentration Risk: Heavy reliance on domestic operations exposes the bank to India-specific economic cycles and regulatory changes.
- Volatility Profile: Beta of 1.20 indicates higher volatility than market, requiring risk tolerance from investors.
Outlook: What to Watch in Coming Quarters
Positive Catalysts
- Credit Growth Momentum: Sustained loan book expansion above 15% annually would support earnings trajectory.
- Margin Stability: Stabilisation of net interest margins around current levels as deposit costs peak.
- Further NPA Improvement: Continued reduction in gross NPA ratio below 1.50% would enhance balance sheet quality.
- Institutional Accumulation: Rising FII and mutual fund holdings signal growing institutional confidence.
- Dividend Increase: Potential for higher dividend payouts given strong profitability and capital adequacy.
Red Flags to Monitor
- Slippage Ratios: Any uptick in fresh NPA formation would signal deteriorating credit quality.
- Margin Compression: Further sequential decline in net interest income would pressure profitability.
- Deposit Growth Lag: Inability to mobilise deposits in line with credit growth could constrain expansion.
- Regulatory Changes: Adverse policy shifts affecting public sector banks could impact operations.
- Economic Slowdown: Broader economic deceleration could increase credit costs and reduce loan demand.
The Verdict: Compelling Value Play in Public Sector Banking
Score: 74/100
For Fresh Investors: Bank of Maharashtra offers an attractive entry point at current valuations, combining strong fundamentals, pristine asset quality, and consistent earnings growth. The P/E ratio of 7.29x and ROE of 19.27% present compelling risk-reward, particularly for investors with a 2-3 year investment horizon. Accumulate on dips towards ₹55-56 levels for optimal entry.
For Existing Holders: Continue holding with conviction. The bank's transformation trajectory remains intact, and the recent breakout to 52-week highs signals potential for further upside. Consider partial profit-booking only above ₹65 to lock in gains whilst maintaining core exposure to the bank's growth story.
Fair Value Estimate: ₹68-70 (15-18% upside from current levels of ₹59.30)
Bank of Maharashtra's Q2 FY26 results reinforce its position as a high-quality public sector bank with sustainable earnings momentum, industry-leading asset quality, and attractive valuations. The combination of operational excellence, strong capital efficiency (ROE of 19.27%), and pristine credit metrics (net NPA of 0.18%) justifies accumulation at current levels for long-term wealth creation.
⚠️ Investment Disclaimer:
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
