Central Bank of India: a 3.8% yield at 0.7 times book

Central Bank of India (NSE: CENTRALBK) paid ₹1.19 per share in dividends across FY26, the first sustained payout after nearly a decade of silence. At ₹30.39, that is a yield of about 3.8%. What happened Q1 FY27 standalone net profit rose 13.3% to ₹1,324 crore. Net interest income grew 15.7% to ₹3,914 crore. Gross advances rose 28.6% to ₹3,54,348 crore. Gross NPA improved to 2.60% from 3.13% a year ago. Net NPA held at 0.49%. The government holds 89.27%. Why it matters For years, Central Bank was the PSU bank you avoided. Gross NPA had crossed 20% in FY19, profits vanished, and dividends stopped. That is why the stock still trades at about 0.7 times book even though the cleanup is largely done. My view There are two stories. The bank cleaned up, returned to profit, and started paying dividends. That is real. But operating profit fell 5.1% while headline net profit rose 13.3%. The difference was taxes, not a better business. Strip it out and the improvement is thin. The 3.8% yield is also built on thin ice. Total FY26 dividends of ₹1.19 a share came from ₹4,369 crore of reported profit. The payout ratio is 27%, manageable. But if credit costs rise or NIM compresses, the comfort of that ratio shrinks fast. At 6.2 times earnings and 0.7 times book, the stock looks cheap. The discount reflects government ownership, weak return on equity of about 12%, and no track record of sustained dividends. What I am watching Q2 FY27 results in October, operating profit growth turning positive, and the NIM trend. On the chart, ₹29.35 is the 52-week low and ₹40.91 is the high. My stance: Buy for yield only near ₹30. Size it small. This is income, not a growth bet. Disclosure: I do not hold a position in Central Bank of India at the time of writing. This is not investment advice.