Graham Number Flags Deep Discounts in India Finance

Graham Number Screen Uncovers Stark Gaps in Indian Financial Stocks The Graham Number doesn't lie — it just doesn't tell the whole story. As of 8 September 2026, a screen of Indian financial stocks using Benjamin Graham's classic fair-value formula has thrown up five names trading at discounts that are hard to ignore: [Power Finance Corporation](/stock/PFC) (NSE: PFC), [REC Ltd](/stock/RECLTD) (NSE: RECLTD), [General Insurance Corporation](/stock/GICRE) (NSE: GICRE), [J&K Bank](/stock/J&KBANK) (NSE: J&KBANK), and [LIC Housing Finance](/stock/LICHSGFIN) (NSE: LICHSGFIN). The margins of safety here aren't thin. PFC sits 47%+ below its Graham Number fair value with a P/E of just 4.76. RECLTD isn't far behind at a similar discount and a P/E of 5.51. For context, the Nifty Financial Services index trades at roughly 15x earnings. These two are barely a third of that. Graham's formula — derived from earnings per share and book value per share — was designed to flag stocks where the market price has drifted far below a conservative estimate of intrinsic worth. It's a blunt instrument. It doesn't account for off-balance-sheet risks, regulatory capital requirements, or the peculiarities of government-linked lenders operating in India's infrastructure financing space. But when the discount is this wide, the question isn't whether the formula is perfect. The question is: what does the market know that the numbers don't? Sector Dynamics: Why Finance Stocks Screen Cheap India's state-linked financial institutions have a structural problem with valuation multiples. Investors price in policy risk, asset quality cycles, and the implicit assumption that capital allocation decisions at entities like PFC and RECLTD aren't always purely commercial. That's a fair concern. But it's worth separating the sentiment discount from the fundamental reality. PFC reported a net interest margin above 3.5% in its most recent full-year results, loan book growth north of 15%, and gross NPA ratios ...