On Tuesday, closing at ₹39.45 on the National Stock Exchange (NSE), down from its previous close of ₹44.20. The sharp decline erased over ₹4,200 crore from its market capitalization, bringing it to approximately ₹34,300 crore. Analysts attribute the drop to a mix of profit-taking after a recent rally, broader PSU banking sector weakness, and concerns over the bank’s growth trajectory as FY25 nears its end.
Central Bank of India Stock Tumbles 10.75% Amid Profit-Taking and Sectoral Headwinds
The stock opened at ₹43.80 but quickly lost ground, hitting an intraday low of ₹39.20—a level not seen since mid-January 2025. Trading volumes spiked to 48.6 lakh shares, nearly double the 30-day average of 25.2 lakh, signaling heavy selling pressure. The fall comes after a volatile month for Central Bank of India, which had gained 12% in March alone, buoyed by optimism around its improving asset quality and a 48.5% year-on-year net profit surge to ₹923.83 crore in Q2 FY25.
Profit-Taking and Sectoral Pressures
Market experts suggest the sell-off was triggered by investors locking in gains after the stock’s recent uptick. “Central Bank had a strong run-up in March, outperforming the Nifty PSU Bank Index, which only rose 3% in the same period,” said Vikram Suryavanshi, Senior Analyst at Reliance Securities. “This kind of correction is typical when short-term traders cash out, especially with FY25 winding down.”
The broader PSU banking sector also faced headwinds, with the Nifty PSU Bank Index slipping 1.8% on Tuesday amid concerns over rising bond yields and potential delays in government divestment plans. Central Bank of India, with a government stake of 89.27% as of March 2025, is particularly sensitive to such macro shifts. Posts on X reflected this sentiment, with one user noting, “PSU banks like Central Bank are bleeding today—profit-taking and sector rotation at play.”
Fundamentals vs. Market Sentiment
Despite the drop, Central Bank of India’s fundamentals remain on an upward trajectory. The bank reported a total business growth of 8.31% to ₹6,68,686 crore as of December 2024, with gross advances up 12.99% year-on-year. Its gross non-performing assets (NPA) also improved, falling to ₹10,459.89 crore from ₹10,786.49 crore a year earlier. “The bank’s recovery in asset quality and profitability is commendable,” said Neha Sharma, Banking Analyst at ICICI Securities. “Today’s decline seems more sentiment-driven than a reflection of its operational health.”
However, challenges linger. The bank’s net interest margin (NIM) of 3.48% in Q3 FY25, while up 20 basis points from the prior year, remains below peers like Bank of Baroda (3.9%) and State Bank of India (3.6%). Additionally, its price-to-earnings (P/E) ratio of 10.2—down from 11.5 pre-drop—suggests it’s trading at a discount, but analysts caution that subdued loan growth and high government ownership could cap upside potential.
Analyst Outlook: Mixed Signals
Brokerages offered varied takes. ICICI Securities maintained a “Hold” rating with a ₹45 target, citing “solid fundamentals offset by macro risks.” Meanwhile, HDFC Securities downgraded to “Sell” with a ₹36 target, warning of “limited catalysts” in the near term. Of the 18 analysts tracking the stock, eight recommend “Buy,” six suggest “Hold,” and four advise “Sell,” per Bloomberg data.
The stock’s 3-year return of 135%—outpacing the Nifty 50’s 37%—highlights its long-term appeal, but its year-to-date loss of 25% in 2025 underscores recent struggles. “Central Bank remains a value play for patient investors, but volatility will persist until clarity emerges on loan growth and divestment,” Suryavanshi added.
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