3 Public Sector Lending Stocks With a Strong Future Roadmap: Power Finance Corporation, Bank of Maharashtra and Indian Overseas Bank

Public sector lending stocks give investors exposure to power project loans and retail, MSME and agriculture lending. Loan growth, funding costs and bad loan trends decide how much of that business turns into profit.

This list covers three public sector lending stocks: Power Finance Corporation for power sector lending, Bank of Maharashtra for Maharashtra deposit base and Indian Overseas Bank for South India lending franchise. Every figure comes from the latest reported financials and the 9 October 2026 market close. Companies without complete current figures were left out.

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What Are Public Sector Lending Stocks?

Public sector lending stocks are shares of companies that lend to power projects and to households, small firms and farmers. Results depend on loan growth, funding costs and asset quality, so funding costs and asset quality separate the stronger names.

Public Sector Lending Stocks at a Glance

The table compares size, valuation, return on equity and debt for the three public sector lending stocks as of the 9 Oct 2026 close.

Among state-backed lending stocks, both trade at a discount to their industry P/E multiples.

Why Do Public Sector Lending Stocks Have a Strong Roadmap in India?

Public sector lending stocks have a strong roadmap in India because power capacity keeps expanding, credit demand from households and small firms is rising and state-owned lenders carry cleaner balance sheets than a few years ago. Three drivers stand out.

• Power sector build-out: New generation and transmission projects need long-term funding.
• Cleaner balance sheets: Lower bad loans and higher provisioning cover leave more room to lend.
• Retail and MSME credit demand: Loans to households and small firms are growing across the country.

Power Finance Corporation: Power Sector Lending Builds the Next Leg

PFC's roadmap rests on lending to power generation, transmission, distribution and renewable energy projects, with power sector investment supporting its loan book.

Revenue grew from Rs 76,344.92 crore in FY22 to Rs 115,533.18 crore in FY26, a 51.3% rise, and FY26 revenue was 8.4% higher than FY25. FY26 net profit rose 10.2% to Rs 33,625.34 crore. Over four years, net profit rose from Rs 18,768.21 crore in FY22 to Rs 33,625.34 crore. In Q1 FY27, net profit rose 0.2% to Rs 8,997.92 crore.

Debt to equity is 7.00 and return on equity is 18.22%. PFC paid a dividend of Rs 18.55 per share for FY26, a yield of 5.73%.

What to watch: Return on equity of 18.22% is the figure to follow as growth continues.

Bank of Maharashtra: Maharashtra Deposit Strength Drives the Pipeline

Bank of Maharashtra's roadmap rests on retail, MSME and agriculture lending through a public sector bank with a strong base in Maharashtra, with steady deposit growth supporting the loan book.

Revenue grew from Rs 15,672.17 crore in FY22 to Rs 32,823.72 crore in FY26, a 109.4% rise, and FY26 revenue was 15.6% higher than FY25. FY26 net profit rose 26.6% to Rs 7,016.86 crore. In Q1 FY27, revenue grew 15.0% to Rs 9,063.53 crore, and net profit rose 26.8% to Rs 2,020.54 crore.

Return on equity is 22.24%. Bank of Maharashtra paid a dividend of Rs 1.2 per share for FY26, a yield of 1.46%. At a P/E of 8.37 against an industry P/E of 12.00, the stock trades below its industry multiple.

What to watch: The P/E of 8.37 against an industry P/E of 12.00 leaves valuation less stretched, so the next quarters' growth is the figure to follow.

Indian Overseas Bank: South India Lending Franchise Drives the Pipeline

Indian Overseas Bank's roadmap rests on retail, MSME and agriculture lending anchored in South India through a public sector bank network, with a rebuilt balance sheet giving room for loan growth.

Revenue grew from Rs 21,641.17 crore in FY22 to Rs 37,742.58 crore in FY26, a 74.4% rise, and FY26 revenue was 11.8% higher than FY25. FY26 net profit rose 59.6% to Rs 5,418.47 crore. Over four years, net profit rose from Rs 1,709.27 crore in FY22 to Rs 5,418.47 crore. In Q1 FY27, revenue grew 23.3% to Rs 10,937.80 crore, and net profit rose 49.3% to Rs 1,659.24 crore.

Return on equity is 16.78%. At a P/E of 9.85 against an industry P/E of 12.00, the stock trades below its industry multiple.

What to watch: The P/E of 9.85 against an industry P/E of 12.00 leaves valuation less stretched, so the next quarters' growth is the figure to follow.

Best Public Sector Lending Stocks in India: PFC vs Bank of Maharashtra vs Indian Overseas Bank on Key Financials

Among the best public sector lending stocks in India, PFC leads on dividend yield; Bank of Maharashtra leads on FY26 revenue growth and return on equity; Indian Overseas Bank leads on Q1 FY27 net profit growth and FY26 net profit growth. The table puts the numbers side by side.

Lender earnings follow loan growth, funding costs and asset quality, so full-year numbers and quarterly trends together give a better view.

How to Evaluate Public Sector Lending Stocks to Buy Before You Invest

A short checklist keeps the research consistent when you screen public sector lending stocks and shortlist public sector lending stocks to buy.

1. Compare each stock's P/E with its industry P/E, which differs by company here.
2. Check gross and net NPA ratios along with the dividend record, because both matter for long-term holders.
3. Check whether revenue growth is turning into profit growth, not only sales.
4. Read loan growth against funding costs to see how growth is financed.
5. Watch capital adequacy and asset quality before sizing a position.
6. Spread exposure across companies and business lines instead of one demand cycle.

Check the Univest Screener for live data on these public sector lending stocks

Risks to Consider Before Investing in Public Sector Lending Stocks

• Interest rate cycles: Changes in policy rates can move borrowing costs and lending spreads.
• Asset quality: A rise in bad loans can reduce earnings and capital.
• Quarterly trends: A single weak quarter can change near-term earnings, so track results every quarter.

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Annual reports and quarterly result presentations are the most reliable places to verify the numbers quoted here, because they show segment details, management commentary and the notes behind each figure.

Comparing a quarter with the same quarter of the previous year gives a cleaner reading than comparing it with the preceding quarter, since seasonal patterns affect many businesses in India.

The shareholding pattern published every quarter shows whether promoters, mutual funds and foreign investors are raising or trimming their holdings, which adds useful context to the financial numbers.

Spreading money across several sectors and company sizes helps keep a portfolio steady, because each business responds differently to interest rates, commodity prices and consumer demand.

Investors who plan to hold for several years often review results twice a year, check whether management delivered on earlier guidance and compare progress with the original reasons for investing.

Reading the notes to accounts and the management discussion section helps separate recurring income from one-time items, which matters when a single quarter looks unusually strong or weak.

Position sizing matters as much as stock selection, because even a well-researched company can move against an investor in the short term for reasons unrelated to its business.

Final Take: Which Stock Has the Strongest Roadmap?

These three state-backed lending stocks cover a power sector financier and two state-owned banks. PFC leads on dividend yield; Bank of Maharashtra leads on FY26 revenue growth and return on equity; Indian Overseas Bank leads on Q1 FY27 net profit growth and FY26 net profit growth.

Across public sector lending stocks, each roadmap still has to turn growth into steady profit, so independent research and position sizing matter. Investors should consult a SEBI-registered advisor before acting on any of the public sector lending stocks to buy discussed here.

FAQs on Public Sector Lending Stocks

Which are the best public sector lending stocks in India with a strong roadmap?

Ans. Power Finance Corporation, Bank of Maharashtra and Indian Overseas Bank stand out for their roadmaps in a power sector financier and two state-owned banks. FY26 revenue growth was 8.4% at PFC, 15.6% at Bank of Maharashtra and 11.8% at Indian Overseas Bank, and return on equity ranges from 16.78% to 22.24%.

Is Bank of Maharashtra a good stock to buy now?

Ans. Bank of Maharashtra has a return on equity of 22.24% and a P/E of 8.37 against an industry P/E of 12.00. Valuation, funding costs and asset quality trends move results. This article is not investment advice, so consult a SEBI-registered advisor before deciding.

What is the P/E ratio of PFC, Bank of Maharashtra and Indian Overseas Bank?

Ans. The P/E ratio is 8.37 for Bank of Maharashtra (industry 12.00) and 9.85 for Indian Overseas Bank (industry 12.00). All of them trade below the industry multiple.

Which of these public sector lending stocks has the highest return on equity?

Ans. Bank of Maharashtra has the highest return on equity at 22.24%, followed by Power Finance Corporation at 18.22% and Indian Overseas Bank at 16.78%.

What are the risks of investing in public sector lending stocks?

Ans. The main risks are interest rate cycles, asset quality and quarterly trends. Changes in policy rates can move borrowing costs and lending spreads.

How did PFC, Bank of Maharashtra and Indian Overseas Bank perform in Q1 FY27?

Ans. Power Finance Corporation reported net profit rose 0.2% to Rs 8,997.92 crore. Bank of Maharashtra reported revenue of Rs 9,063.53 crore, up 15.0% year on year, and net profit rose 26.8% to Rs 2,020.54 crore. Indian Overseas Bank reported revenue of Rs 10,937.80 crore, up 23.3% year on year, and net profit rose 49.3% to Rs 1,659.24 crore.

Do public sector lending stocks pay dividends?

Ans. PFC and Bank of Maharashtra pay dividends. The dividend yield is 5.73% for PFC and 1.46% for Bank of Maharashtra, based on dividends declared for FY26.

How can I invest in public sector lending stocks in India?

Ans. You can buy public sector lending stocks through a demat and trading account on NSE or BSE after checking each company's financials, margins and valuation. The Univest Screener lets you compare fundamentals before placing an order. Investments in securities are subject to market risk, so consider your risk profile first.