A Mumbai-based PSU bank, which is not in the media limelight, however, has been growing its operations without much fanfare. This bank has 65% of its 4,556 branches (as of Q2FY26) across the country in rural and semi-urban areas and is trading at very attractive valuations.

We are talking about Central Bank of India. A name you probably would not expect to hear of in the context we just laid out.  Let’s start with valuations.

Central Bank trades at about 0.9 times its standalone book value, according to Screener.in. Effectively what this means is that if the book value of the bank is Rs 100, it is available for purchase for Rs 90. In contrast, State Bank of India (SBI) , the largest PSU bank, trades at a price to (standalone) book value of nearly 1.7 times.

Now, this could happen for various reasons. For instance, if the bank had large bad loans which could wipe off a chunk of its book value. At the same time, this could also happen if investors, well, just missed it because this was such a boring stock to begin with.

Let’s dig in to figure out what’s really going on with Central Bank.

First, the financial performance of this Mumbai-based PSU bank has shown a strong improvement in the September 2025 quarter.

Report card for Q2FY26 – strong loan growth and fall in provisions

Central Bank of India’s advances grew advances by 17.7% y-o-y to Rs 2.86 lakh crore in the September 2025 quarter. The bank has highlighted strong growth in retail and corporate loans.

Its net interest margin (NIM) was 2.9% in Q2FY26 vis-a-vis 3.4% a year earlier. The RBI had cut repo rates in its meeting in early June 2025, and while interest rates on bank loans / credit facilities have come down, interest rates on deposits with the bank come down with a lag. This has created a temporary pressure on NIMs. 

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Asset quality of this Mumbai-based bank has also been fairly good — its percentage of net non-performing assets was 0.48% in the September 2025 quarter vis-a-vis 0.69% a year earlier. Larger rival, SBI’s percentage of net NPAs was 0.42% in the September 2025 quarter vis-a-vis 0.53% a year earlier.

Meanwhile, a near 47% fall in its provisions, helped Central Bank of India to grow its standalone net profit by 32.9% y-o-y to Rs 1,212.9 crore in the second quarter of FY26.

And SBI grew its standalone net profit by nearly 10% y-o-y to Rs 20,159.7 crore in Q2FY26.  

Efficiency kings – Return on Assets (ROA)

Central Bank of India has highlighted return on assets (annualised) of 1.01 % in the September 2025 while SBI has return on assets (net assets basis – annualised) of 1.17% in the quarter under review.

For context, HDFC Bank , the largest private sector bank, has a return on assets (average) – not annualized of 0.49% in the September 2025 quarter; annualizing for FY26 it would be nearly 1.96%.

Growth outlook 

Central Bank of India has guided for growth in advances of 14% to 16% during FY26, NIM of above 3% and net NPA below 0.45% during the current financial year.

Its loans and advances were 2.83 lakh crore at the end of FY25, and this is projected to reach Rs 3.2 lakh crore by the end of FY26. The PSU bank’s advances were 2.86 lakh crore at the end of September 2025 quarter.

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The RBI has taken several steps to lower the cost of lending in the broader banking system, and boost lending in the current peak lending season. Of equal importance will be the PSU bank’s ability to manage the pressure on NIM – the central bank had once again cut repo rates in early December 2025. Investors will be closely monitoring Central Bank of India and other leading banks to manage this parameter as well as other parameters.

Investors on Dalal Street 

The central government has indicated that it is looking at the next round of PSU bank mergers. While details are sketchy, nevertheless Central Bank of India is getting increased attention. Savvy investors who are looking for investment ideas for 2026 have this stock also on their radar. 

Central Bank of India trades at a standalone P/E of 7.7 times, and over the past 10 years, it has traded at a P/E between 7.6 and 25.6 times, according to Screener.in. It’s effectively near the bottom of this valuation band.

On a price to (standalone) book value, it currently trades at 0.9 times, and over the past 10 years, it has traded between 0.2 and 2 times.

SBI trades at a standalone P/E of 12.7 times, and over the past 10 years, it has traded at a P/E between times 8.1 and 24.7 times.

On a price to (standalone) book value, it currently trades at 1.7 times, and over the past 10 years, it has traded between 0.6 and 2.3 times.

Central Bank of India trades at a valuation much lower than its larger rivals, and it could be on the watch list of stocks for calendar year 2026, given its growth plans. 

Disclaimer:

Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.

The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.

Amriteshwar Mathur is a financial journalist with over 20 years of experience.

Disclosure: The writer and his family do not hold the stocks discussed in this article. 

The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.