New Delhi: Indian Bank shares surged nearly 10% on Friday after the state-owned lender reported a strong set of first-quarter earnings, driven by higher net profit, robust net interest income (NII) growth and improved asset quality.

The stock climbed to Rs 869.20 on the NSE from its previous close of Rs 793.15, gaining more than 76 points following the earnings announcement.

Q1 Profit Grows 10%

Indian Bank reported a 10% year-on-year increase in net profit to Rs 3,273 crore for the quarter ended June 30, 2026, compared with Rs 2,973 crore in the corresponding period last year.

Net interest income (NII), a key measure of a bank’s core earnings, rose 17% to Rs 7,435 crore from Rs 6,359 crore a year earlier.

Other income increased 8% year-on-year to Rs 2,633 crore, while operating profit grew 16.5% to Rs 5,557 crore, reflecting healthy growth in the bank’s overall business.

Provisions Rise

The lender set aside Rs 1,196 crore as provisions during the quarter, higher than Rs 691 crore in the year-ago period. However, provisions declined 2.5% sequentially from Rs 1,225 crore reported in the January-March quarter.

Despite the higher provisioning, the bank delivered strong profitability, supported by healthy loan growth and improved operating performance.

Asset Quality Improves

Indian Bank continued to strengthen its balance sheet during the quarter.

Gross non-performing assets (GNPA) improved to 1.86%, down from 1.98% in the previous quarter. Net non-performing assets (NNPA) remained stable at 0.15%, indicating sustained asset quality.

The improvement in bad loan metrics was viewed positively by investors and analysts, contributing to the sharp rally in the stock.

Stock Outperforms Peers

Indian Bank shares have gained more than 38% over the past year, outperforming the Nifty PSU Bank Index, which has risen around 20.5% during the same period.

At the previous close, the bank’s market capitalisation stood at Rs 1.17 lakh crore, while the stock traded at a price-to-earnings (P/E) ratio of 9.32.

According to Bloomberg data, 12 of the 14 analysts tracking the stock have a ‘Buy’ recommendation, while one has a ‘Hold’ rating and another recommends ‘Sell’. The average 12-month target price of Rs 987.79 implies further upside from current levels.