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The market expects Indian Bank to carry on much as it has.
At today’s share price, buyers are assuming Indian Bank earns about 14.7% a year on the money invested in it, from here on. Over the last ten years it actually earned about 16.8% a year. The two are close, so the share price does not need the business to improve or to stumble. It needs it to keep doing roughly what it already does.
- How it is valued: Excess return — the correct lens for a bank.
- What the price assumes: 14.7% return on equity, against 16.8% the model takes from its own record.
- Ten-year record: Between FY2019 and FY2026, Indian Bank's revenue went from ₹21,074 crore to ₹78,333 crore — it compounded at about 21% a year over 7 years.
- Biggest swing factor: Credit costs. Main risk: Asset quality.
01A Chennai bank that absorbed Allahabad Bank
Indian Bank, founded in Chennai in 1907, is a public-sector bank majority-owned by the Government of India, with a strong presence in southern India.
In April 2020 it merged with Allahabad Bank, roughly doubling its size and adding branches across northern and eastern India.
02What the market is assuming
Work backwards from today's share price and you can see what buyers are quietly taking for granted. Here is the return on equity that price implies for Indian Bank, next to what the model assumes from the company's own record.
The further apart these two numbers are, the bigger the bet a buyer at today's price is making.
03Indian Bank's record, in plain numbers
Between FY2019 and FY2026, Indian Bank's revenue went from ₹21,074 crore to ₹78,333 crore — it compounded at about 21% a year over 7 years. Net profit grew from ₹321 crore to ₹11,460 crore, about 67% a year — faster than revenue, so margins widened. In FY2026 it kept 14.6% of revenue as net profit — against a low of 1.5% in FY2019 and a high of 15.3% in FY2025. The latest year added 8.7% to revenue, well behind its own long-run pace.
Revenue and earnings per share in ₹, return on equity and leverage as ratios — all from the filed statements.
Revenue and net profit by year (₹ crore)
| Year | Revenue | Net profit | Margin |
|---|---|---|---|
| FY2019 | 21,074 | 321 | 1.5% |
| FY2020 | 24,727 | 758 | 3.1% |
| FY2021 | 45,649 | 3,016 | 6.6% |
| FY2022 | 46,268 | 3,994 | 8.6% |
| FY2023 | 52,790 | 5,330 | 10.1% |
| FY2024 | 64,232 | 8,129 | 12.7% |
| FY2025 | 72,051 | 10,995 | 15.3% |
| FY2026 | 78,333 | 11,460 | 14.6% |
04How Indian Bank gets valued — and why
Excess return — the correct lens for a bankA bank is not valued with a discounted cash flow. Deposits are its raw material and interest is operating income, so enterprise value means nothing here. It is valued on excess return instead — the profit it earns above the cost of the equity funding it.
05What decides Indian Bank's value
Credit costs
Lower provisions drove the recovery.
Return on equity
Whether returns hold through the next cycle.
Deposit base
A strong deposit franchise in the south.
Retail and MSME lending
Diversified lending supports growth.
06What could go wrong
- Asset quality. A new credit downturn would hit profit.
- Policy lending. Government priorities shape lending.
- Capital. Growth may need fresh equity.
07What the full Indian Bank valuation shows
Sign in free to see the complete Indian Bank valuation
- ✓Fair value per share — from the excess-return model banks are valued on
- ✓The bank workpaper — book value, cost of equity and sustainable return, step by step
- ✓Bull, base and bear cases — and exactly which assumptions move between them
- ✓Peer comparison — against SBI, Bank of Baroda and Canara Bank
- ✓Downloadable report — the full write-up, yours to keep
08Questions people ask about Indian Bank
Which bank merged into Indian Bank?
Allahabad Bank, in April 2020.
How is Indian Bank valued?
On excess return: what it earns above its cost of equity.
Is Indian Bank a public-sector bank?
Yes, it is majority-owned by the Government of India.
Is Indian Bank overvalued?
At ₹933 the market is pricing in roughly 14.7% sustained ROE, against the ~16.8% its own record supports. That is less than it has delivered — on these numbers the market is asking the business for less than its own record, which usually means it doubts the record repeats.
What is the intrinsic value of Indian Bank?
It is computed from the filed financial statements using the method that fits this business (excess return), with every assumption shown alongside the result. The per-share figure and the full working are in the report.
How much debt does Indian Bank carry?
Debt to equity stands at 0.59, against 0.39 at the start of the period — the balance sheet is a core input to the cost of capital used here.