Altman Z-Score Distress Zone Hits PSU Banks, LICI

Altman Z-Score distress zone for PSU banks and LICI now covers eight NSE-listed names as of 2026-09-23: [LICI](/stock/LICI), [Central Bank of India](/stock/CENTRALBK), [Canara Bank](/stock/CANBK), [Bank of Baroda](/stock/BANKBARODA), [Punjab National Bank](/stock/PNB), [Bank of India](/stock/BANKINDIA), [UCO Bank](/stock/UCOBANK), [Union Bank of India](/stock/UNIONBANK). Every score prints below 1.80, the historical cutoff for distress in the Altman model. The screen is not a standalone verdict. It weights balance-sheet density and retained earnings, plus working capital and asset turnover. For state-owned lenders, that mix produces low scores even when regulatory capital looks acceptable. Still, the cluster is hard to ignore: no PSU bank on this list clears 1.31, and LICI prints the weakest score at 0.64. Low P/E ratios sit next to these flags. PNB trades near 6.2x FY26E earnings, Union Bank 5.8x, Canara Bank 4.9x. That's cheap. Moderate ROCE doesn't fix the Z-score because the formula looks at operating return on total assets, not equity multiples. FairStock Score on most of these names sits between 41 and 58, below the 70 quality threshold. Altman Z-Score Distress Zone Screen: The PSU Bank Set Current scores as of 2026-09-23: | Name | Z-Score | Comment | |---|---|---| | [LICI](/stock/LICI) | 0.64 | Weakest; actuarial liabilities dominate | | [UCO Bank](/stock/UCOBANK) | 0.78 | Low asset turnover | | [Central Bank](/stock/CENTRALBK) | 0.89 | Legacy NPA drag | | [PNB](/stock/PNB) | 0.93 | Size doesn't lift score | | [Bank of India](/stock/BANKINDIA) | 1.04 | Working capital drag | | [Bank of Baroda](/stock/BANKBARODA) | 1.12 | Better franchise, still sub-1.80 | | [Union Bank](/stock/UNIONBANK) | 1.24 | Near group high but below cutoff | | [Canara Bank](/stock/CANBK) | 1.31 | Best score in flagged set | Why Low P/E Ratios Don't Offset Z-Score Risk Canara's GNPA ratio of 3.6% and CET1 near 11.6% don't prevent a sub-1.8 score. PNB's GNPA ratio near 3.9% and UCO...