UNIONBANK - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.1

📊 Core Financials Breakdown

Profitability

ROE: 17.1% — strong, indicating efficient use of equity capital.

ROCE: 6.72% — modest, typical for PSU banks with high leverage.

EPS: ₹24.1, with PAT of ₹4,116 Cr. — down from ₹4,985 Cr., but still robust.

Debt-to-equity: 11.2 — high, but expected for banks due to deposit liabilities.

Dividend Yield: 3.48% — attractive for income-focused investors.

Quarterly Performance

Profit variation: 11.9% — stable earnings trend.

FII/DII sentiment: Both increased slightly, signaling institutional confidence.

💰 Valuation Metrics

Metric Value Insight

P/E Ratio 5.66 Deeply undervalued vs. industry average (7.91).

P/B Ratio ~0.89 Below book value — suggests value buying opportunity.

PEG Ratio 0.11 Very attractive — implies undervaluation relative to growth.

Intrinsic Value ~₹145–₹155 (est.) Current price of ₹137 is below fair value.

🧠 Business Model & Competitive Edge

Core Operations: Retail, agriculture, MSME lending, and overseas banking.

Strengths

Fifth-largest nationalized bank with a century-old legacy.

Strong RAM (Retail, Agriculture, MSME) focus — 54% of loan book.

Expanding global footprint: branches in Dubai, Sydney, London, and JV in Malaysia

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Capital adequacy ratio at 18.3% with CET-I at 15.3% — well above regulatory norms

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Challenges

PSU structure limits agility.

ROCE remains low despite strong earnings.

📈 Technicals & Entry Guidance

DMA 50: ₹135, DMA 200: ₹131 — price is above both, indicating bullish momentum.

RSI: 59.1 — neutral zone.

MACD: 0.21 — mild bullish crossover.

📌 Entry Zone: ₹130–₹135 — ideal for accumulation before breakout.

🕰️ Long-Term Holding Guidance

2025 Target: ₹150–₹160 (based on analyst consensus)

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2026–2027 Target: ₹180–₹220 (assuming continued EPS growth and asset quality improvement)

Holding Strategy: Union Bank is a solid long-term PSU play with improving fundamentals, strong dividend yield, and attractive valuation. Ideal for investors seeking stability and upside in India’s banking sector.

You can explore Care Ratings’ detailed report on Union Bank or check Trendlyne’s analyst forecasts for deeper insights.

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www.careratings.com

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trendlyne.com

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