Graham Number Screen Flags India Financials at 47%+ Discount

Graham Number Screen Flags Deep Margin of Safety in India Financials Six Indian stocks are trading at discounts of 47% or more to their Benjamin Graham fair-value estimates, with [REC Ltd](/stock/RECLTD) (NSE: RECLTD) and [Power Finance Corporation](/stock/PFC) (NSE: PFC) anchoring a cluster of PSU lenders that have compressed sharply relative to book value and earnings. The Graham Number — calculated as the square root of (22.5 × EPS × BVPS) — is an arithmetic floor, not a price target. But when five names in the same sector screen this cheap simultaneously, it's a signal worth interrogating. The margin of safety readings: RECLTD at 52.3%, PFC at 51.8%, [LIC Housing Finance](/stock/LICHSGFIN) (NSE: LICHSGFIN) at 47.1%, J&K Bank (NSE: J&KBANK) at 49.6%, Sammaan Capital (NSE: SAMMAANCAP) at 48.9%. Indegene (NSE: INDGN) sits at 61.2% — the widest gap on the screen — but its P/E of 33.44 puts it in a different category entirely. A 61% discount to Graham Number on a 33x earnings stock isn't a value signal; it's a reminder that Graham's formula was built for low-multiple industrials and financials, not growth compounders. Strip Indegene out and what remains is a tight cohort of PSU lenders and housing financiers. That's not coincidence. It reflects a deliberate re-rating by institutional investors who have rotated out of rate-sensitive financials over the past 12 months as the RBI held rates longer than markets expected. PSU Lenders: Why the Discount Persists REC and PFC are infrastructure lenders with loan books tied directly to India's power sector capex cycle. Both carry net interest margins above 3.5% and return on equity above 18% — numbers that, in isolation, look attractive. The market discount reflects two concerns: asset quality risk in state utility loans, and the ceiling on re-rating that comes with majority government ownership. That ownership ceiling is real. PSU financials have historically traded at 0.8–1.2x book versus private sector peers at 2.0–3....