UCO Bank shares in focus as it launches Rs 2,000 crore QIP

Over the past six months, UCO Bank’s share price has tumbled more than 20 percent

Shares of UCO Bank are poised to take center stage on March 24 as the state-run lender kicks off a Rs 2,000 crore qualified institutional placement (QIP). The issue is priced at Rs 34.2 per share, marking a discount compared to the previous closing price.

Over the past six months, UCO Bank’s share price has tumbled more than 20 percent, underperforming the broader market, where the benchmark Nifty 50 index has shed only 9 percent during the same period.

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In Q3FY25, UCO Bank posted a robust 27 percent increase in net profit compared to the same period last year. The lender reported a net profit of Rs 639 crore for the quarter, up from Rs 502 crore in Q3FY24.

Net interest income (NII) also saw a healthy surge, rising 19.6 percent year-on-year (YoY) to Rs 2,377 crore from Rs 1,988 crore. Meanwhile, total income grew 15 percent to Rs 7,406 crore, highlighting the bank’s improving core operations.

Profitability gains were further underscored by an increase in the net profit margin, which expanded to 8.64 percent. Asset quality showed continued improvement, with gross non-performing assets (GNPA) falling to 2.91 percent from 3.18 percent in the previous quarter. Net NPAs also dropped to 0.63 percent.

Looking ahead, UCO Bank has reaffirmed its guidance for 8-10 percent deposit growth and 12-14 percent credit growth in FY25. Management expects the slippage ratio to remain between 1-1.25 percent, while credit costs are projected to stay below 1 percent for the fiscal year. GNPA and NNPA are anticipated to remain below 3 percent and 0.65 percent, respectively.

Analysts at Arihant Capital believe the bank’s strong Retail, Agriculture, and MSME (RAM) credit growth will sustain momentum in the medium to long term. Additionally, an uptick in corporate credit growth could further enhance overall advances, supporting better valuations for the stock.

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