Altman Z-Score Flags LICI, PSU Banks in Distress Zone

The latest Altman Z-Score screen, run on trailing 12-month public filings, is ugly. [LICI](/stock/LICI) (NSE: LICI) prints a negative 0.83. Seven public sector banks, including [Bank of Baroda](/stock/BANKBARODA) (NSE: BANKBARODA), [Canara Bank](/stock/CANBK) (NSE: CANBK), and [Punjab National Bank](/stock/PNB) (NSE: PNB), cluster between 0.33 and 0.37. All sit below the 1.8 distress threshold. That's not a subtle miss. It's a full break below the line. This reads as a balance-sheet warning. The market has been treating PSU bank stocks as cheap value. Low price-to-book ratios and single-digit trailing P/E multiples have attracted buyers. The Altman Z-Score screen says the same names carry balance-sheet stress that the P/E multiple doesn't capture. Altman Z-Score Screen: What the Numbers Show The gap matters because the score isn't a sentiment gauge. It blends several balance-sheet and income-statement lines against total assets and total liabilities. For insurers and banks, the classic model has limits. Insurance policy liabilities aren't debt in the industrial sense. Bank deposits are raw material, not the same as borrowings at a manufacturing firm. That said, the screen still measures how little equity stands behind total obligations. [LICI](/stock/LICI) (NSE: LICI) is the extreme. A negative 0.83 comes from thin net worth relative to policy liabilities and investment assets. For the banks, 0.33 to 0.37 is uniformly weak. There's no outlier. [Central Bank of India](/stock/CENTRALBK) (NSE: CENTRALBK), [Bank of India](/stock/BANKINDIA) (NSE: BANKINDIA), [UCO Bank](/stock/UCOBANK) (NSE: UCOBANK), and [Union Bank of India](/stock/UNIONBANK) (NSE: UNIONBANK) all sit in the same range. The consistency is the story. Low P/E Multiples Meet Balance-Sheet Risk PSU bank stocks have been cheap for a reason. [Bank of Baroda](/stock/BANKBARODA) trades at a fraction of its book value. [Punjab National Bank](/stock/PNB) carries a single-digit trailing P/E. Those optics have...