UNIONBANK - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 4.0

Here’s an insightful look at Union Bank of India, a prominent public sector bank with intriguing valuation appeal and a mix of strengths and caution flags.

💰 Core Financials Overview

ROE: 17.0%, ROCE: 6.72% — solid return on equity, especially for a PSU bank; ROCE lower due to asset-heavy model

EPS: ₹24.6 — strong earnings power given the modest price

Debt-to-Equity: 11.8 — high due to banking sector norms, not a red flag in this context

PAT Q-o-Q: ₹5,011 Cr → ₹4,428 Cr — slight dip, though YoY growth (+21.6%) remains encouraging

📊 Valuation Signals

Metric Value Interpretation

P/E Ratio 5.39 Undervalued — significantly below industry average (7.49)

P/B Ratio ~0.89 Trading below book value — market not fully pricing in growth potential

PEG Ratio 0.11 Very attractive — undervalued relative to growth

Dividend Yield 3.58% Generous — makes it appealing for income-oriented investors

🏦 Business Model & Competitive Advantage

Core Focus: Corporate banking, retail loans, government-linked services

Strengths

Expansive branch and ATM network across India

Access to stable deposits due to government backing

Improving asset quality and digital transformation initiatives

Concerns

Exposure to stressed sectors can impact NPA ratios

Competitive pressure from private and fintech banks

Operational efficiency still evolving compared to peers

📉 Technical and Momentum Indicators

RSI: 31.2 — nearing oversold territory, which may present a value-buying opportunity

MACD: -2.66 — bearish divergence; momentum may be soft in short term

Volume Spike: Higher than 1-week average — indicates heightened activity, possibly profit-booking

DMA Watch

Current Price < 50-DMA (₹142) — short-term weakness

Near 200-DMA (₹131) — important support zone

🎯 Entry & Long-Term Strategy

Entry Zone: ₹128–₹133 — attractive window near 200-DMA and RSI trough

Long-Term Target: ₹160–₹175 over 12–18 months, assuming credit growth and stable asset quality

Investor Outlook

Great for value-focused investors looking for PSU recovery stories

Offers income via dividends and potential for re-rating

Would you like a comparative breakdown with peers like Bank of Baroda or Canara Bank? Or maybe a sensitivity model based on credit growth and provisioning trends? Just say the word — I’ve got you covered. 📈

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