Altman Z-Score Flags Distress in LICI, PSU Banks

Altman Z-Score does not flatter state-owned Indian financials right now. [LICI](/stock/LICI) (NSE: LICI) carries a score of -0.83, well below the 1.8 distress threshold. [Central Bank of India](/stock/CENTRALBK) sits at 0.33. [Canara Bank](/stock/CANBK) is barely better at 0.34. Seven PSU banks plus LICI now screen inside the classic Altman danger zone. The screen comes from public filings, not management commentary. That's the point. The Altman Z-Score blends working capital, retained earnings, operating profit, market value of equity, and sales to size up bankruptcy risk. A score below 1.8 has historically flagged stress. For banks and insurers, the formula has limits. But investors shouldn't ignore the cluster. It says balance-sheet pressure is broad across state-linked lenders, even while their P/E and P/B ratios trade at discount levels. Altman Z-Score risk screen: what the numbers show Central Bank at 0.33 and Canara Bank at 0.34 sit more than 80% below the 1.8 line. That is not a rounding error. LICI's -0.83 is even worse. The negative score reflects an insurance balance sheet built on policyholder liabilities. Altman's original model was designed for manufacturers, not insurers. Still, a negative number means the market is assigning little standalone cushion for surprises. The PSU bank cluster tells the same story. [Bank of Baroda](/stock/BANKBARODA) (NSE: BANKBARODA), [Punjab National Bank](/stock/PNB) (NSE: PNB), [Bank of India](/stock/BANKINDIA) (NSE: BANKINDIA), [UCO Bank](/stock/UCOBANK) (NSE: UCOBANK), and [Union Bank of India](/stock/UNIONBANK) (NSE: UNIONBANK) all fall below 1.8. That's seven PSU banks in one screen. The market already prices many of them below one times book. The Z-score says the discount exists for a reason. Public sector banks have spent a decade cleaning up bad loans. The Z-score suggests the cleanup has not yet produced balance sheets strong enough to pass a classic solvency screen. At current prices, [Canara Bank](/stock/C...