Domestic brokerage firm Systematix Institutional Equities has raised its target price on Union Bank of India to ₹215 per share while maintaining its ‘buy’ rating on the stock, after the state-owned bank reported results that exceeded brokerage estimates.
“We value the standalone bank at 1.1 times its FY28E adjusted book value per share of ₹196, based on a return on equity (RoE) profile of 16.2%, 15.8%, and 15.8% for FY27E, FY28E, and FY29E, respectively. Further, we assign a value of ₹4.3 per share to its subsidiaries,” the brokerage said.
Systematix Institutional Equities said Union Bank of India reported a standalone net profit of ₹5,540 crore in Q2FY27, 5.3% above its estimate, marking a 3.8% quarter-on-quarter and 30.3% year-on-year increase.
The growth was primarily driven by lower provisioning costs, which declined 28.5% sequentially and 49.8% annually, along with an improvement in net interest margin (NIM). NIM expanded by 6 basis points quarter-on-quarter and 19 basis points year-on-year to 2.86%.
Global gross advances grew 18.5% year-on-year, led by 22.4% growth in MSME advances, while deposits increased 6.9%. The slippage ratio improved by 12 basis points sequentially and 21 basis points annually to 0.7%.