3X rise in 1 year and 5th 52-week high in February; do you have this PSU bank stock in your portfolio?

Indian Overseas Bank (IOB) is on a 52-week high spree. It has hit five 52-week highs this month with the latest being Rs 81.06 on Wednesday (February 7, 2024). The PSU bank stock hit 52-week highs on February 6, 5, 2 and 1 also. The stock's 52-week high on February 1 was Rs 52.65 and the lowest rate on that day was Rs 48.00. From the lowest point on that day to the highest point today, the stock has jumped by 68.86 per cent. The stock has soared by 83 per cent year-to-date.

On February 2, the bank became the fifth PSU bank to cross the Rs 1 lakh crore market value. 

Five days later, at market close on Wednesday, the company's market value stood at Rs 1,50,708.93 crore, which means a Rs 10,000 crore average increase per day.

If we see its performance from a larger perspective, the stock has given 204.89 per cent or over three fold returns in the last one year. 

Its 52-week low is Rs 20.87. 

Indian Overseas Bank Q3 results

In its December quarter results reported in January, the company reported a 30 per cent rise in its profit after tax rose to Rs 723 crore from Rs 555 crore Year-on-Year. 

The lender's net interest income also rose to Rs 6,176 crore in Q3 from Rs 5,056 crore in the corresponding period last year.

The bank's operating profit jumped to Rs 1,780 crore in the December quarter from Rs 1,540 crore in Q3 FY22.

The bank's income increased to Rs 7,437 crore during the December quarter from Rs 6,006 crore in the same quarter last year.

The stock's growth in the last 1 year looks impressive. 

Amid such a backdrop, is it the right time to invest in its stock? 

What experts say

Omkar Kamtekar, Research Analyst, M/s. Bonanza Portfolio Ltd, said that the stock is overvalued and the new entry should be made after a price correction. 

"When compared to peers the performance of IOB is amongst the best. The management has executed a turnaround which is currently priced in. The important aspect is to maintain this for a sustained period. At the current price, IOB is trading at 5.96x TTM PB against the Industry average of 1.2x which indicates there is overvaluation. Long-term investors who hold the stock from lower levels should book profits, while any new entry should be made only after a price correction," said Kamtekar.

Aditya Agarwal, Head Derivatives & Technicals at Sanctum Wealth

"Indian Overseas Bank has seen a stellar rally this week and is already up almost 31% since last Friday closing. Stock has been consolidating in broad range of 38-52 and has given a breakout above 52 levels and that made high of 84 in Wednesdays trade. Our overall long-term view remains bullish in IOB, however, given the sharp run-up, we would advise investors to wait for retracement and add if stock comes around 65/60 levels with long term targets of 92/110."

What should be the support and resistance levels? 

Avdhut Bagkar, Derivatives & Technical Analyst, StoxBox says that the stock has claimed fresh upside by hitting a new 52-week high on robust volumes. He says the next breakout exists over the hurdle of 90 level. 

"The price action is heading in the same direction, and conservative traders may witness profit booking around the same," said Bagkar. 

He predicts that if the stock sustains the level of 90, further upside towards 125 cannot be ruled out. 

The expert gives the support level for the current price at 60, which he says needs to be honoured on the closing basis.