Graham Number Screen Finds Deep Value in PSU Lenders

Graham Number Screen: The Arithmetic of Deep Value A mechanical formula keeps surfacing eight India-listed names below fair value. The Graham Number screen uses trailing earnings per share and book value per share. Fair value equals the square root of 22.5 multiplied by EPS and book value per share. It's a formula with no forecast input and no sentiment input. That's the appeal. As of 2026-09-04, [Indegene](/stock/INDGN) (NSE: INDGN) trades 61.2% below its Graham Number. [LIC Housing Finance](/stock/LICHSGFIN) (NSE: LICHSGFIN) sits 55.8% below. The screen also flags [REC](/stock/RECLTD) (NSE: RECLTD) and [PFC](/stock/PFC) (NSE: PFC), both 47.2% below. [J&K Bank](/stock/J&KBANK) (NSE: J&KBANK), [Central Bank of India](/stock/CENTRALBK) (NSE: CENTRALBK), [Sammaan Capital](/stock/SAMMAANCAP) (NSE: SAMMAANCAP), and [GIC Re](/stock/GICRE) (NSE: GICRE) round out the list. That concentration in financials and PSU names isn't random. It reflects a market that prices public sector lenders as if loan book deterioration will consume the book. The Graham Number doesn't challenge that view. It just states what trailing earnings and net assets imply. Why PSU Lenders Dominate the Screen Two PSU power financiers show identical 47.2% discounts. REC and PFC have grown book value while equity prices have lagged. The bear case is straightforward: state power utilities delay payments. That pressures cash flow. It doesn't always show up immediately in book value. A screen built on historical book value and earnings will miss this timing gap. That's how a value trap forms. LIC Housing Finance at 55.8% below is another financial. The market has kept the stock cheap for years. Developer loan exposure and net interest margin pressure are the usual concerns. At current prices, the stock trades at less than half of its Graham Number. For investors who believe the mortgage cycle has troughed, that's a wide margin. For those who expect further developer defaults, the discount is a warning....