Motilal Oswal's research report on Union Bank of India
Union Bank of India (UNBK) reported 107% YoY growth in PAT to INR22.4b (in line) driven by lower provisions and margin expansion of 6bp QoQ to 3.21% in 3QFY23. Business growth was healthy fueled by the RAM segment while CASA ratio witnessed a slight moderation during the quarter. Fresh slippages moderated, which coupled with healthy recoveries and upgrades resulted in an improvement in asset quality ratios. PCR improved to ~75% in 3QFY23. Restructured book declined to 2.38% of loans from 2.60% in 2QFY23. The SMA book, at 72bp, was also fairly controlled.
Outlook
We largely maintain our earnings assumptions and estimate an RoA/RoE of 1.0%/16.8%, respectively, by FY25. Retain BUY with a TP of INR100 (premised on 0.9x Sep’24E ABV).
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