Valuation Upgrade: From Attractive to Very Attractive
The primary catalyst for the rating upgrade is the marked improvement in Bank Of India’s valuation profile. The stock now boasts a very attractive valuation grade, driven by a low price-to-earnings (PE) ratio of 6.83 and a price-to-book (P/B) value of 0.82. These multiples are notably lower than many peers in the public sector banking space, signalling undervaluation relative to intrinsic worth.
Additionally, the bank’s price/earnings-to-growth (PEG) ratio stands at a mere 0.26, indicating that earnings growth is not fully priced in by the market. This PEG ratio is among the most favourable in its peer group, including Canara Bank (PEG 0.27) and Indian Bank (PEG 0.53). The dividend yield of 2.63% further enhances the stock’s appeal, offering investors a steady income stream alongside capital appreciation potential.
Compared to its sector counterparts, Bank Of India’s valuation metrics suggest a compelling entry point for investors seeking value in the public sector banking segment.
Financial Trend: Strong Earnings Growth and Asset Quality
Bank Of India’s financial performance has been robust, with the company reporting positive results for 18 consecutive quarters. The third quarter of fiscal year 2025-26 saw interest earned reach a record high of ₹18,927.13 crore, while profit before tax excluding other income (PBT less OI) surged 45.5% to ₹1,337.98 crore compared to the previous four-quarter average.
Net profit growth has been exceptional, with a compound annual growth rate (CAGR) of 51.96% over the long term. This strong earnings trajectory is complemented by a healthy return on equity (ROE) of 11.98% and a return on assets (ROA) of 0.92%, both of which reflect efficient utilisation of capital and assets.
Importantly, the bank maintains a low gross non-performing asset (NPA) ratio of 2.26%, underscoring prudent lending practices and effective risk management. Net NPA to book value stands at 5.15%, which is manageable within the context of the bank’s overall asset quality.
This week's disclosed pick, a Large Cap from NBFC, comes with precise Target Price and analysis. Check if you're positioned right for this opportunity!
- - Precise target price set
- - Weekly selection live
- - Position check opportunity
Quality Assessment: Strong Fundamentals and Institutional Confidence
Bank Of India’s quality grade has been bolstered by its consistent financial discipline and operational strength. The bank ranks among the top 1% of all 4,000 stocks rated by MarketsMojo, securing a rank of 5 within the mid-cap universe and 17 across the entire market. This reflects superior fundamentals relative to a broad investment universe.
Institutional investors hold a significant 21% stake in the company, having increased their holdings by 1.13% in the previous quarter. This uptick in institutional ownership signals confidence from sophisticated market participants who typically conduct rigorous fundamental analysis before committing capital.
The bank’s long-term growth prospects are underpinned by a strong lending franchise, evidenced by a gross NPA ratio well below sector averages and a steady increase in net profits. These factors contribute to a robust quality score that supports the upgrade to a Strong Buy rating.
Technical Outlook: Positive Momentum and Market Outperformance
From a technical perspective, Bank Of India’s stock price has demonstrated resilience and upward momentum. The current price of ₹152.00 is close to its 52-week high of ₹169.90, reflecting strong investor demand. The stock has outperformed the broader Sensex index significantly, delivering a 40.42% return over the past year compared to Sensex’s 5.37% gain.
Over longer horizons, the stock’s performance remains impressive, with a five-year return of 184.64% versus the Sensex’s 64.00%. Even in the short term, the stock has rebounded 1.91% over the last month while the Sensex declined 4.78%, indicating relative strength.
These technical signals, combined with fundamental improvements, reinforce the positive outlook and justify the upgrade in the investment rating.
Bank Of India caught your attention? Explore our comprehensive research report with in-depth analysis of this mid-cap Public Sector Bank stock – fundamentals, valuations, financials, and technical outlook!
- - Comprehensive research report
- - In-depth mid-cap analysis
- - Valuation assessment included
Comparative Industry Position and Market Capitalisation
Within the public sector banking industry, Bank Of India’s valuation and financial metrics place it favourably against peers. While Canara Bank and Indian Bank maintain attractive valuations, Bank Of India’s very attractive valuation grade and superior PEG ratio highlight its undervaluation relative to growth potential.
The company’s market capitalisation grade remains modest at 2, reflecting its mid-cap status, but this also suggests room for appreciation as the bank continues to deliver strong earnings growth and operational improvements.
Its consistent quarterly performance, low asset quality risks, and improving institutional interest position Bank Of India as a compelling investment opportunity in the public sector banking space.
Conclusion: Strong Buy Rating Reflects Comprehensive Strength
The upgrade of Bank Of India’s investment rating to Strong Buy is a reflection of its very attractive valuation, robust financial trends, high-quality fundamentals, and positive technical momentum. The bank’s ability to sustain strong profit growth, maintain low NPAs, and attract institutional investors underpins this positive outlook.
Investors seeking exposure to a fundamentally sound public sector bank with significant upside potential should consider Bank Of India as a core portfolio holding. The combination of value, quality, and growth metrics makes it a standout choice in the mid-cap banking segment.
Unlock special upgrade rates for a limited period. Start Saving Now →
