PSU Bank shares are gaining in popularity on account of their rapid growth in advances and very attractive valuations vis-à-vis their private sector rivals. It’s no surprise that Mumbai-based Bank of India is getting increased attention from savvy investors at the end of the calendar year 2025, given its growth trajectory and valuations that are amongst the lowest in the PSU banks segment.
The Bank of India stock was broadly flat at Rs 139.3 in early Friday, and not too far from its 52-week high of Rs 151.4 that was reached on 26 November 2025.
This bank, which is not in the media limelight, however, has been growing its operations without much fanfare.
Let’s start with valuations.
Bank of India trades at about 0.8 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 80.
Valuations of the Cheapest Public Sector Banks (Based on P/BV)
| Name | Market Capitalization (Rs Cr) | Price to book value (x) |
| Bank of India | 63,623 | 0.76 |
| Central Bank | 33,373 | 0.87 |
| Union Bank (I) | 114,733 | 0.91 |
| Bank of Baroda | 148,780 | 0.95 |
| Punjab Natl.Bank | 138,318 | 0.98 |
| UCO Bank | 35,926 | 1.10 |
| Canara Bank | 136,060 | 1.18 |
| Indian Bank | 104,955 | 1.36 |
| Bank of Maha | 43,842 | 1.40 |
| Pun. & Sind Bank | 18,995 | 1.42 |
| SBI | 892,047 | 1.57 |
| I O B | 65,338 | 1.88 |
Now, this could happen for various reasons. For instance, this could happen if investors, well, did not understand the growth story at Bank of India or just ignored the stock.
Bank of India’s core domestic banking operations are reflected in its standalone results.
In contrast, State Bank of India (SBI), the largest PSU bank, trades at a price to (standalone) book value of nearly 1.7 times.
Let’s dig in to figure out what’s really going on with Bank of India.
Report card for Q2FY26 – Strong loan growth and fall in provisions
The Mumbai-based Bank of India has seen a broad-based improvement in several of its operational parameters in the September 2025 quarter.
Bank of India’s advances grew 15.8% y-o-y to Rs 6.95 lakh crore in the September 2025 quarter. This can be traced back to strong growth in retail and SME loans in the quarter under review.
Its net interest margin (NIM) was 2.4% in Q2FY26 vis-a-vis 2.8% a year earlier. Larger rival, SBI’s domestic NIM was 3.09 % in the September 2025 quarter vis-à-vis 3.27% 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.
Asset quality of Bank of India has also been good — its percentage of net NPAs was 0.65% in Q2FY26 vis-a-vis 0.94% a year earlier. The largest PSU bank, SBI’s percentage of net NPAs was 0.42% in the September 2025 quarter vis-a-vis 0.53% a year earlier.
In additional, a near 57% fall in its provisions, helped Bank of India to grow its standalone net profit by 7.6% y-o-y to Rs 2,554.6 crore in the second quarter of FY26.
Meanwhile, 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)
Bank of India’s return on assets (annualised) was 0.9% in the September 2025 quarter, 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
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 Bank of India and other leading banks’ 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 Bank of India and other leading banks to grow their loans books as well as manage various other parameters.
Investors on Dalal Street
Media reports have repeatedly highlighted that the next round of PSU bank mergers is on the cards, and senior government officials have also broadly referred to the discussions underway.
And while details or the path to the PSU bank merger plan have not been clearly elaborated by the RBI or the union finance ministry, nevertheless, Bank of India is getting increased attention. Savvy investors who are looking for investment ideas for 2026 have this stock right at the centre of their attention.
Bank of India trades at a standalone P/E of 6.4 times, and over the past 10 years, it has traded at a P/E between 5 and 23.4 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 0.8 times, and over the past 10 years, it has traded between 0.2 and 1 times.
SBI trades at a standalone P/E of 12.5 times, and over the past 10 years, it has traded at a P/E between times 8.1 and 24.7x. 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.
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.
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