Buy Union Bank of India; target of Rs 140: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Union Bank of India has recommended buy rating on the stock with a target price of Rs 140 in its research report dated March 20, 2025.

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March 21, 2025 / 10:19 IST

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Prabhudas Lilladher's research report on Union Bank of India

We initiate coverage on UNBK with ‘BUY’ given the consistent improvement in earnings quality as reflected by (1) steady stress reduction leading to material decline in provisions, (2) lower NIM fall due to profitability focus (3) improving fee to asset ratio and (4) enhancing capital adequacy (currently best-in-class). While GNPA has materially reduced over FY22-9MFY25 from 11.1% to 3.9%, it could further fall, suggesting that GNPA decline over FY25-27E may be higher than peers. With all wage-related provisions accounted, opex should not see any negative surprises and may grow in tandem with loans; we expect core RoA/RoE of 0.9%/12% to sustain over the medium term.

Outlook

Valuation is attractive at 0.7x on Mar’27 ABV suggesting a 23% discount to SBI. We assign a multiple of 0.9x on Mar’27 ABV to arrive at a TP of Rs140. Initiate with ‘BUY’.

For all recommendations report, click here