Indian Bank

“Indian Bank has successfully executed a post-merger NPA turnaround and now earns above its cost of equity, but the investment case hits a structural ceiling: government ownership creates permanent misalignment between management and minority shareholders, directed lending mandates will generate future NPA cycles, and the current 1.54x P/B valuation leaves no margin of safety for the inevitable next downturn. The India credit growth tailwind is real, but it is better captured through higher-quality private-sector franchises with durable moats, pricing power, and management with skin in the game. Indian Bank is a mediocre business at a fair price — the definition of a neutral.”