Why is Bank of Maharashtra falling/rising?

Consistent Outperformance Against Benchmarks

Bank of Maharashtra has demonstrated remarkable resilience and growth compared to the broader market indices. Over the past week, the stock gained 4.06%, while the Sensex declined by 1.86%. This positive momentum extends over longer periods, with the bank delivering a 15.53% return in the last month against a 2.21% fall in the Sensex. Year-to-date, the stock has appreciated by 6.20%, contrasting with the Sensex’s 2.16% decline. Over the last year, the bank’s shares surged by 24.88%, significantly outperforming the Sensex’s 9.00% gain. Even over three and five years, the stock has delivered exceptional returns of 107.89% and 347.08% respectively, dwarfing the Sensex’s 38.37% and 68.16% gains. This consistent outperformance underscores the bank’s strong market positioning and investor confidence.

Technical Strength and Market Activity

On 14-Jan, Bank of Maharashtra hit a new 52-week high of ₹67.77, signalling strong upward price momentum. The stock has been on a four-day winning streak, accumulating a 6.24% return during this period. It is trading above all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, which is a technical indicator of sustained bullish sentiment. Additionally, investor participation has increased notably, with delivery volumes on 13-Jan rising by 64.25% compared to the five-day average, reaching 1.8 crore shares. This heightened liquidity supports the stock’s ability to absorb larger trades without significant price disruption, further encouraging investor interest.

Robust Financial Fundamentals Driving Confidence

Bank of Maharashtra’s rise is underpinned by strong fundamental metrics. The bank maintains a low Gross Non-Performing Asset (NPA) ratio of 1.72%, reflecting prudent lending practices and effective risk management. Its net profits have grown at a compound annual growth rate (CAGR) of 70.60%, an extraordinary achievement signalling robust profitability. Net Interest Income, excluding other income, has expanded at an annual rate of 21.64%, supporting sustained earnings growth. The bank has reported positive results for 21 consecutive quarters, highlighting consistent operational performance. Key indicators such as the credit-deposit ratio stand at a healthy 83.79%, while quarterly interest earned and profit after tax (PAT) have reached record highs of ₹7,344.20 crore and ₹1,779.33 crore respectively.

Valuation and Institutional Backing

Despite its strong growth, Bank of Maharashtra trades at an attractive valuation with a price-to-book value of 1.5, which is discounted relative to its peers’ historical averages. The company’s return on assets (ROA) of 1.7% further enhances its appeal. Over the past year, the stock’s return of 24.88% closely aligns with a 23.9% increase in profits, resulting in a low price/earnings-to-growth (PEG) ratio of 0.3, indicating undervaluation relative to earnings growth. Institutional investors have increased their stake by 6.02% in the previous quarter, now collectively holding 18.42% of the company. This growing institutional interest is a strong endorsement of the bank’s fundamentals, as these investors typically conduct rigorous analysis before committing capital.

Market Recognition and Consistent Returns

Bank of Maharashtra is recognised as one of the top 1% of companies rated by MarketsMojo across a universe of 4,000 stocks. It ranks 13th among mid-cap companies and 37th across the entire market, reflecting its strong standing. The bank has consistently outperformed the BSE500 index in each of the last three annual periods, reinforcing its track record of delivering superior returns. This consistency, combined with strong fundamentals and increasing investor participation, explains the stock’s upward trajectory and sustained market interest.

In summary, Bank of Maharashtra’s share price rise on 14-Jan is supported by a combination of strong financial performance, attractive valuation metrics, technical strength, and growing institutional confidence. These factors collectively contribute to the stock’s outperformance relative to broader market indices and sector peers, making it a compelling proposition for investors seeking growth in the banking sector.

Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →