Buy Union Bank of India; target of Rs 200: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Union Bank of India has recommended buy rating on the stock with a target price of Rs 200 in its research report dated January 15, 2026.

Broker Research

January 16, 2026 / 13:01 IST

Buy

Prabhudas Lilladher's research report on Union Bank of India

UNBK saw a strong quarter; as NIM/asset quality were better leading to a 32% beat on core PAT. CRR cut/better liquidity management drove rise in reported NIM by 9bps QoQ to 2.76%. However, due to repo cut and catch up in deposit growth, NIM may fall and bottom out in Q4FY26E. Gross slippage ratio was lower at 84bps (PLe 1.1%) while recovery was healthier resulting in negative net slippage that led to lower standard asset and loan loss provisions. Transition impact of ECL is estimated at Rs42-43bn and bank does not expect material effect as bank has enough PCR buffer while 95% of corporate book is rated BBB & above.

Outlook

We lower provisions over FY25-28E by 8-11bps leading to core PAT upgrade of ~2.5%. Consistency in loan growth/NIM remain key monitorables while asset quality remains strong. We tweak multiple to 1.0x from 0.9x and raise TP to Rs200 from Rs160 as we roll forward to Mar’27 ABV. Retain ‘BUY.’

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