Indian Overseas Bank’s (NSE:IOB) Shift From Loss To Profit
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Indian Overseas Bank’s (NSE:IOB): Indian Overseas Bank provides various banking products and services. The ₹80b market-cap company’s loss lessens since it announced a -₹63.0b bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -₹53.6b, as it approaches breakeven. As path to profitability is the topic on IOB’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for IOB’s growth and when analysts expect the company to become profitable.
Check out our latest analysis for Indian Overseas Bank
According to the industry analysts covering IOB, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of ₹7.0b in 2021. Therefore, IOB is expected to breakeven roughly 2 years from now. What rate will IOB have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 110%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into details of IOB’s upcoming projects, however, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I’d like to point out is that IOB has managed its capital judiciously, with debt making up 35% of equity. This means that IOB has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of IOB to cover in one brief article, but the key fundamentals for the company can all be found in one place – IOB’s company page on Simply Wall St. I’ve also compiled a list of important factors you should look at:
Historical Track Record: What has IOB’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Indian Overseas Bank’s board and the CEO’s back ground.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
