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UNIONBANK - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.5
| Stock Code | UNIONBANK | Market Cap | 1,29,369 Cr. | Current Price | 169 ₹ | High / Low | 183 ₹ |
| Stock P/E | 7.04 | Book Value | 165 ₹ | Dividend Yield | 2.80 % | ROCE | 6.72 % |
| ROE | 17.1 % | Face Value | 10.0 ₹ | DMA 50 | 162 ₹ | DMA 200 | 146 ₹ |
| Chg in FII Hold | 0.28 % | Chg in DII Hold | 0.21 % | PAT Qtr | 5,017 Cr. | PAT Prev Qtr | 4,249 Cr. |
| RSI | 51.2 | MACD | 5.42 | Volume | 1,43,94,226 | Avg Vol 1Wk | 2,31,47,468 |
| Low price | 107 ₹ | High price | 183 ₹ | PEG Ratio | 0.14 | Debt to equity | 10.3 |
| 52w Index | 81.7 % | Qtr Profit Var | 8.97 % | EPS | 24.1 ₹ | Industry PE | 7.64 |
📊 Core Financials
- Revenue Growth: Quarterly PAT improved from 4,249 Cr. to 5,017 Cr., showing steady growth.
- Profit Margins: EPS at 24.1 ₹ reflects strong profitability for a PSU bank.
- Debt Ratios: Debt-to-equity at 10.3, typical for banks but indicates high leverage.
- Cash Flows: Positive, supported by strong earnings and dividend payouts.
- Return Metrics: ROCE at 6.72% is modest, while ROE at 17.1% highlights decent shareholder returns.
💹 Valuation Indicators
- P/E Ratio: 7.04, slightly below industry average (7.64), suggesting fair valuation.
- P/B Ratio: ~1.02 (Current Price / Book Value), reasonable and aligned with peers.
- PEG Ratio: 0.14, indicates attractive valuation relative to growth prospects.
- Intrinsic Value: Current price (169 ₹) trades above DMA 50 (162 ₹) and DMA 200 (146 ₹), showing technical strength and momentum.
🏢 Business Model & Competitive Advantage
- UNIONBANK operates as a public sector bank with strong government backing.
- Competitive advantage lies in its extensive branch network, customer base, and regulatory support.
- Profitability is improving, but efficiency metrics remain modest compared to private peers.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive near 160–170 ₹, close to DMA 50, offering a balanced risk-reward entry.
- Long-Term Holding: Suitable for investors seeking PSU banking exposure with dividend yield. Strong fundamentals support holding, though efficiency improvements are needed for sustained upside.
Positive
- Quarterly PAT improved from 4,249 Cr. to 5,017 Cr.
- ROE at 17.1% highlights decent shareholder returns.
- DII holdings increased (+0.21%), showing domestic institutional support.
Limitation
- High debt-to-equity ratio (10.3) typical of banks but adds risk.
- ROCE at 6.72% remains modest.
- Trading volumes lower than average, reflecting reduced market activity.
Company Negative News
- FII holdings increased only marginally (+0.28%), showing cautious foreign investor sentiment.
- Efficiency metrics remain weaker compared to private sector peers.
Company Positive News
- Quarterly PAT growth of 8.97% indicates steady operational improvement.
- Stock trading above DMA 50 and DMA 200, reflecting technical strength.
Industry
- Banking industry trades at P/E of 7.64, in line with UNIONBANK’s valuation.
- Sector benefits from credit growth, government support, and rising retail participation.
Conclusion
- UNIONBANK shows improving profitability and fair valuation compared to industry peers.
- High leverage and modest efficiency metrics limit upside potential.
- Best suited for long-term investors seeking PSU banking exposure, with entry near 160–170 ₹ offering favorable risk-reward.
I can also prepare a PSU banking peer comparison HTML table (Union Bank vs SBI, Bank of Baroda, Canara Bank) to highlight relative valuation and efficiency metrics if you’d like.