A breakout above ₹42–₹45 could mark the beginning of a trend reversal, according to the analyst.

Indian Overseas Bank (IOB) shares traded 1% lower on Friday ahead of its June quarter earnings release. 

SEBI-registered analyst Rohit Mehta noted that the IOB stock is consolidating near its support zone, attempting to build a base after a sharp 53% decline from its February 2024 peak. He advised watching for a breakout above ₹42–₹45 for potential trend reversal. 

On the technical charts, Mehta identified a support zone at ₹33.96 to ₹36.92, with resistance at ₹60.02, followed by the next level at ₹83.76, which is also its all-time high for IOB.

Looking at its shareholding pattern, promoter holding remained stable at 94.61% in June 2025. Meanwhile, Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) have reduced their holdings. FII holding has decreased from 0.22% to 0.08%, while DIIs holding decreased from 2.59% to 2.37%. 

In its March quarter, revenues increased by 15.16% year-over-year (YoY) and by 7.34% quarter-over-quarter (QoQ). Financing Profit reduced by 22.16% (YoY), but rose by 10.57% (QoQ). 

Profit before tax (PBT) rose by 30.26% (YoY), and by 25.63% (QoQ). At the same time, earnings per share (EPS) grew by 27.91% (YoY) and by 19.57% (QoQ). 

Mehta noted that the bank has delivered strong profit growth of 19.0% CAGR over the last 5 years. And its operational efficiency improved with a reduction in working capital cycle from 191 days to 111 days. 

However, despite consistent profitability, the company has not distributed dividends to shareholders. Additionally, its low interest coverage ratio suggests a limited buffer for debt servicing. 

Mehta also flagged some other areas of concern: Its return on equity stands at a modest 9.98% over the past 3 years. And the bank holds contingent liabilities of ₹1,76,039 crore, which poses a potential financial risk. On the earnings outlook, he noted that the possibility of capitalizing interest cost may inflate results.

IOB shares have declined 24% year-to-date (YTD).

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