From NPA nightmare to CASA champion: why Indian Bank’s undervalued stock is poised for a breakout.

Business Overview Indian Bank is a mid-sized public sector lender with a network of over 5,000 branches and a growing retail and MSME franchise. It merged with Allahabad Bank in 2020, boosting its deposit base and branch footprint. Over the last two years, management has prioritized cleaning up non-performing assets, while steadily growing low-cost CASA deposits. A renewed focus on unsecured retail loans provides room for margins to expand as capital ratios remain robust. Financial Performance & Valuation Indian Bank’s return on assets climbed to around 0.7% in FY25 from 0.4% two years ago, driven by lower credit costs and improved recoveries. The bank’s Common Equity Tier-1 ratio stands near 12.5%, comfortably above regulatory minima. At a price-to-book multiple of roughly 0.5x—below the PSU average of 0.8x—it offers value if asset quality continues to improve. Earnings estimates have been upgraded twice this year, reflecting better than expected credit growth and margin stability. Key Metrics - Price-to-Book ratio: 0.5x - CET1 ratio: 12.5% - Return on Assets: 0.7% Catalysts - Continued reduction in gross non-performing assets - Strong retail and MSME loan growth lifting yields - Government push for digital lending platforms Risks - Rise in interest rates squeezing lending spreads - Slower corporate recovery impacting restructured book - Regulatory changes on provisioning norms