Quality Assessment: Sustained Financial Strength and Lending Discipline
Bank of Maharashtra’s quality rating has been bolstered by its consistent financial performance and prudent lending practices. The bank reported a Gross Non-Performing Asset (NPA) ratio of just 1.72%, indicating strong asset quality relative to many peers in the public sector banking space. This low NPA ratio is a testament to the bank’s disciplined credit appraisal and recovery mechanisms.
Moreover, the bank has demonstrated remarkable long-term growth in profitability, with a compound annual growth rate (CAGR) of 70.60% in net profits over recent years. This robust earnings growth is supported by a healthy expansion in Net Interest Income (NII), which has grown at an annual rate of 21.64%, excluding other income streams. The bank’s ability to sustain positive results for 20 consecutive quarters further reinforces its operational resilience and quality of earnings.
Valuation: Attractive Metrics Amidst Market Outperformance
From a valuation standpoint, Bank of Maharashtra presents an appealing investment case. The stock currently trades at a price-to-book (P/B) ratio of 1.5, which is modest compared to its historical averages and peer group valuations. This discount provides a margin of safety for investors seeking value in the public sector banking segment.
The bank’s return on assets (ROA) stands at a healthy 1.6%, reflecting efficient utilisation of its asset base to generate profits. Additionally, the price-to-earnings-to-growth (PEG) ratio is a low 0.5, signalling that the stock’s price growth potential is undervalued relative to its earnings growth trajectory. Over the past year, the stock has delivered an 18.18% return, comfortably outperforming the Sensex’s 8.21% gain, while profits have risen by 25.7%, underscoring the stock’s strong fundamental momentum.
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Financial Trend: Robust Quarterly Results and Institutional Confidence
The recent quarterly results for Q2 FY25-26 have been very positive, with the bank reporting its highest quarterly interest earned at ₹7,128.38 crores. Profit before tax excluding other income (PBT less OI) surged by 44.4% compared to the previous four-quarter average, reaching ₹973.15 crores. Net profit (PAT) also hit a record ₹1,633.14 crores, reflecting strong operational leverage and cost management.
These results are consistent with the bank’s long-term growth trend, supported by a 1.06% increase in interest income. The bank’s ability to sustain such growth over 20 consecutive quarters highlights its stable earnings base and effective business model.
Institutional investor participation has also increased significantly, with a 5.02% rise in stakeholding over the previous quarter. Institutional investors now hold 17.42% of the company’s shares, signalling growing confidence from sophisticated market participants who typically conduct rigorous fundamental analysis before committing capital.
Technical Outlook: Shift to Bullish Momentum
The upgrade in Bank of Maharashtra’s investment rating is strongly supported by a positive shift in technical indicators. The technical grade has improved from mildly bullish to bullish, reflecting enhanced market sentiment and momentum.
Key technical signals include a bullish daily moving average and Bollinger Bands on both weekly and monthly charts, indicating upward price momentum and volatility expansion in the stock’s favour. The KST (Know Sure Thing) indicator is bullish on a weekly basis, while the Dow Theory signals mildly bullish trends on both weekly and monthly timeframes.
Although the MACD (Moving Average Convergence Divergence) remains mildly bearish on weekly and monthly charts, other indicators such as On-Balance Volume (OBV) show bullish trends monthly, suggesting accumulation by investors. The stock’s recent price action has been strong, with a day change of +4.67% and a current price of ₹60.46, close to its 52-week high of ₹61.55.
Long-Term Performance: Market-Beating Returns
Bank of Maharashtra has delivered exceptional returns over multiple time horizons, significantly outperforming benchmark indices. Over the last one year, the stock has generated an 18.18% return compared to the Sensex’s 8.21%. Over three years, the stock’s return stands at 98.23%, more than double the Sensex’s 39.17% gain. Even over five years, the bank has delivered a staggering 362.94% return, vastly outpacing the Sensex’s 77.34%.
This consistent outperformance highlights the bank’s strong fundamentals, effective management, and favourable market positioning within the public sector banking industry.
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MarketsMojo Ranking and Industry Position
Bank of Maharashtra is ranked among the top 1% of all 4,000 stocks rated by MarketsMojo, reflecting its superior quality and investment appeal. It holds the 4th position among all mid-cap stocks and ranks 7th across the entire market, underscoring its strong standing within the public sector banking sector.
The bank’s market capitalisation grade is rated 2, indicating a mid-cap status with significant growth potential. Its mojo score of 84.0 and upgraded mojo grade of Strong Buy reflect a comprehensive assessment of quality, valuation, financial trends, and technicals, making it a compelling choice for investors seeking exposure to the public sector banking space.
Conclusion: A Compelling Investment Opportunity
The upgrade of Bank of Maharashtra’s investment rating to Strong Buy is well justified by its robust financial performance, attractive valuation, positive technical signals, and strong institutional backing. The bank’s consistent earnings growth, low asset quality risks, and market-beating returns position it favourably for continued appreciation.
Investors looking for a fundamentally sound and technically supported public sector bank stock would find Bank of Maharashtra an appealing addition to their portfolio. The combination of strong lending practices, disciplined financial management, and improving market sentiment provides a solid foundation for future gains.
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