PSU Bank Stocks: Indian Bank, PNB Lead 2025 Return Surge

PSU banks extend a strong run

Public sector bank (PSU bank) stocks have delivered sharp gains during Prime Minister Narendra Modi’s second term, with Indian Overseas Bank (IOB) cited as the leader at 472% returns. The broader trend has kept multiple PSU lenders in focus as investors reassess state-owned banks after a multi-year period of balance-sheet repair. The rally has also pushed several counters to fresh highs, with Punjab National Bank (PNB) hitting a multi-year high as its shares rose to Rs 134. Market participants have also discussed the possibility of a re-rating for PSU banks, citing stronger fundamentals and improved return metrics.

The recent moves have not been limited to one or two names. The article data points to a broad-based revaluation across the PSU bank universe, with several stocks turning multibaggers over the period measured from the March 2020 market lows.

Where the sector stands on index performance

A sectoral snapshot of 2022 performance highlighted PSU-heavy indices among the biggest gainers of that year. The Nifty PSU Bank index and the Nifty CPSE index were listed as the top two gainers of 2022, with gains of 65% and 19.5% respectively at the time of the cited analysis.

While the index numbers refer to 2022, they help frame why PSU themes continue to draw attention in later periods as well. When a segment leads for an extended stretch, investors and brokerages tend to scrutinise whether the performance reflects one-off re-rating, earnings delivery, or a mix of both.

Indian Bank: multibagger status keeps it in focus

Brokerage commentary in the article centres on Indian Bank, a public sector lender that has delivered outsized long-term returns. One section notes the stock has soared about 1,775% from its Covid-19 low near Rs 45 per share. Another data point says Indian Bank share price rose 1,240% since June 2020, from around Rs 44 to Rs 625.

The stock also hit an all-time high of Rs 658.5 earlier this month, according to the provided text. Alongside long-term gains, shorter-period moves were also highlighted: Indian Bank was up 60% in the last one year in one portion of the article data, and another portion says it gained 14% over the last 12 months and 18% so far this year. The same article input says the stock is up 30% in the last six months and is 77% above its 52-week low of Rs 474.05 hit in January 2025.

Broker calls and trading levels: buy vs reduce

The provided text includes divergent brokerage views on Indian Bank. Master Capital suggested “partial buying at current level 800 and rest on fall close to 750,” with a target price band of Rs 831 to Rs 930 and a stop loss of Rs 720.

A separate brokerage stance in the text said it remains positive on Indian Bank, citing “superior return profile and credible management,” and retained a ‘buy’ while raising its target price to Rs 900.

But the set is not one-sided. Elara Capital was mentioned with a ‘reduce’ rating and a target price of Rs 730, valuing the stock at a P/E multiple of 8.5 to 9.5 times and P/B multiple of 1.2 to 1.5 times for FY26-28E.

Valuation and ownership snapshot

Indian Bank’s valuation was described as 7.5 times price-to-earnings (P/E) and 1.17 times price-to-book (P/B). The Nifty PSU Bank index was cited at 6.91 P/E and 1.17 P/B in the same dataset, offering a quick benchmark to compare the stock with the broader PSU bank basket.

On ownership, the government held 73.84% as of March 2025. Mutual funds held 12.69%, foreign portfolio investors 4.74%, and 2.9 lakh retail investors owned 2.59% equity.

The text also positions the bank operationally: it is described as the seventh-largest PSU bank in India, with over 5,000 branches.

What analysts tracked by Bloomberg indicate

The article input cites Bloomberg data: of 13 analysts tracking Indian Bank, 11 had a ‘buy’ rating, while one each recommended a ‘hold’ and a ‘sell’. The average 12-month analyst price target was Rs 681, which implied a potential upside of 9.3% from the referenced price.

This split between a high share of buys and a modest implied upside highlights a common pattern in strong momentum stocks: ratings can remain supportive even when near-term upside from consensus targets narrows, especially after a steep run-up.

Broader PSU re-rating narrative: market caps and long-cycle gains

Beyond Indian Bank, the provided data notes that “all PSU bank stocks have become multibaggers,” with gains “by as much as 1,544%” over the referenced period. Market capitalisation changes were also highlighted. Punjab and Sind Bank was cited as the sharpest spike, with market cap rising 26.9 times from Rs 781.67 crore on March 31, 2020 to Rs 21,052.60 crore on September 24, 2025.

The same list places Indian Bank at 19.6X and Canara Bank at 8.5X in market-cap multiples. Several others were noted as rising between 8.4X and 4.3X, including Bank of Maharashtra, IOB, PNB, Union Bank of India, Bank of Baroda, Bank of India, Central Bank of India, State Bank of India, and UCO Bank.

Other PSU counters in focus: orders, splits, and momentum

The dataset also flags non-bank PSU or PSU-linked names drawing attention. Ircon International rose nearly 9% in a session after it announced an order win worth Rs 1,096 crore from the Government of Meghalaya, and the stock touched an intraday high of Rs 150.45 against a prior close of Rs 138.25. Cochin Shipyard was cited as up 18% in the past week and up 131.38% in 2024, after signing an agreement with the Ministry of Defence for refit and dry docking of a large Indian naval vessel, with estimated contract value exceeding Rs 1,000 crore and a five-month timeline.

Rail Vikas Nigam Ltd (RVNL) was mentioned as down 4.45% last week but up 139.25% in the year, while also being declared L1 for a PSPCL distribution infrastructure package. Separately, Indo Thai Securities announced a stock split, with record date July 18 and the last day to buy shares for eligibility noted as “today,” alongside a 616% return over the last year.

Key figures at a glance

Indian Bank snapshot from the provided data

Conclusion

PSU bank stocks have stayed in the spotlight, supported by large multi-year gains across the pack and headline moves in names such as IOB, PNB and Indian Bank. For Indian Bank specifically, the story blends strong historical returns with mixed brokerage stances, ranging from buy calls with targets up to Rs 900 to a reduce view at Rs 730. Investors tracking the theme will likely keep watching how valuations, ownership trends, and order-flow driven sentiment across the broader PSU space shape near-term positioning.