Neutral Union Bank of India; target of Rs 180: Motilal Oswal

Motilal Oswal recommended Neutral rating on Union Bank of India with a target price of Rs 180 in its research report dated January 14, 2026.

Broker Research

January 15, 2026 / 11:54 IST

Neutral

Motilal Oswal's research report on Union Bank of India

Union Bank of India (UNBK) reported 3QFY26 PAT of INR50.2b (up 9% YoY/up 18% QoQ, 32% beat), led by NIMs expansion, and significantly lower-than-expected provisions. NII rose 0.9% YoY/5.9% QoQ to INR93.3b (6% beat), driven by a 9bp QoQ expansion in NIMs to 2.76% (vs. MOFSLe 2.65%). This was supported by a 14bp QoQ decline in CoF as well as healthy loan growth. Loan book expanded 7.7% YoY/4.5% QoQ to INR9.91t. Management expects stronger growth momentum in 4Q and remains comfortable with CD ratio expansion to ~82–83%. Fresh slippages declined 14% QoQ to INR18.5b vs INR21.5b in 2QFY26. GNPA/NNPA ratio improved 23bp/4bp QoQ to 3.06%/0.51%. PCR increased to 83.6%.

Outlook

We increase our earnings estimate by 7.9%/6.4%/7.1% for FY26E/FY27E/FY28E earnings and estimate FY27E RoA/RoE at 1.17%/14.3%. We expect loans to post a 9% CAGR over FY25-27E. We reiterate our Neutral rating on the stock with a revised TP of INR180 (1.0x FY27E ABV).

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