Indian Overseas Bank Intrinsic Value
IOB · Financial Services · Current price ₹30.75
Is Indian Overseas Bank undervalued?
We estimate the fair value of Indian Overseas Bank at ₹15 per share, against a market price of ₹33. That puts the share price about -54.6% above our estimate, at medium confidence. This is our view of what the business is worth, not a target price or a forecast of where the share price will go.
How this fair value is calculated
This estimate comes from 2 methods: Justified P/B (Gordon) (₹16), Residual income (excess return on book) (₹19). Each is weighted by how well its inputs held up for this company. The full working, including the assumptions and what data was missing, is set out below.
The range around this estimate
Our estimate for Indian Overseas Bank spans ₹14 to ₹19. A margin of safety means buying meaningfully below the estimate: the wider the range, the more room the assumptions leave for error.
Margin of safety
Value investors look for a margin of safety: a discount to estimated value that absorbs being wrong. At ₹33 against an estimated value of ₹15, Indian Overseas Bank trades at -54.6%, i.e. a premium to our estimate. How much margin to demand depends on how much you trust the inputs, which is what the confidence band below is for.
How we got this fair value
Every number below is part of the same estimate for Indian Overseas Bank. Nothing here is a target price or a forecast of where the share price will go.
Workable, with real gaps. Weigh it alongside your own view rather than on its own.
Estimate range ₹14 – ₹19
Why this method for this business
The justified P/B and residual income models are most appropriate for a public sector bank like IOB, as they focus on book value and returns relative to the cost of equity, which are critical for assessing the value of a bank's equity.
The models behind the number
Each method is weighted by how well its inputs held up for this company.
10% sustainable ROE vs 10.6% cost of equity justifies ~0.9× book
Book value plus the present value of returns earned above the 10.6% cost of equity
- relative_pb was excluded due to lack of peer data and the absence of a clear benchmark for comparison.
What was missing
- Lack of forward-looking analyst estimates
- Limited peer data for relative P/B model
What drives it
11 inputs, grouped by how strong each claim is
- ROE (normalized)
- 10%
- Dividend payout
- 0%
- Book value / share
- 19.2 ₹
computed
ratios/derived
reported
- Cost of equity
- 10.6%
building-block
- Near-term growth g
- 10%
- High-growth years
- 10 yrs
- Terminal ROE
- 10%
- Terminal growth g
- 5%
computed
building-block
faded toward COE + moat
computed
- Moat
- None
- Excess-return horizon
- 3 yrs
computed
computed
- Justified P/B
- 0.85×
two-stage Gordon
Who computed this
A language model (qwen3:8b) selects the valuation method and the judgement inputs for Indian Overseas Bank: which models suit the business, the moat, the growth and margin assumptions. It does not produce the number. The fair value itself is computed in Python by a deterministic engine (version 2026.08.1) from those inputs, so the same inputs always give the same result and every figure above can be traced to a source.
Estimated 14 Sept 2026. Re-run as new financials and news arrive.
How we value stocks
We estimate what a business is worth from its own economics: cash flows, returns on capital, and a multiple justified by its quality, rather than from where the share price has been. A fair value estimate is a view, not a verdict, and it is only as good as the inputs listed above.
Read the full fair-value methodologyMore on Indian Overseas Bank
DocStoX estimates are computed from reported financials, for informational purposes only, not investment advice. Consult a SEBI-registered advisor before investing.