UCOBANK - Investment Analysis

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

Investment Rating: 2.7

🏦 Fundamental Analysis of UCOBANK

✅ Positives

Low Valuation

P/E: 15.4 vs Industry PE: 7.49 — slightly premium but still low

PEG Ratio: 0.38 — undervalued relative to earnings growth

Book Value: ₹24.6 vs Price: ₹30.2 — ~1.2x book, reasonable

Dividend Yield: 1.29% — modest income stream

EPS Growth: ₹1.97 — improving earnings base

Quarterly Profit Growth: ₹666 Cr vs ₹640 Cr — +23.8% YoY

RSI: 35.5 — approaching oversold zone, potential bounce

⚠️ Concerns

Weak Profitability Metrics

ROE: 8.50%, ROCE: 5.76% — below ideal for long-term compounding

Indicates limited efficiency in capital deployment

High Leverage

Debt-to-Equity: 10.4 — typical for banks, but still a risk factor

Requires close monitoring of asset quality

Technical Weakness

MACD: -0.32 — bearish momentum

Price below DMA 50 & DMA 200 — short-term downtrend

Institutional Sentiment

FII Change: -0.31%, DII Change: -0.62% — both reducing exposure

52w Index: 11.0% — underperformance vs broader market

📉 Valuation & Ideal Entry Zone

Given current price and technical indicators

Ideal Entry Zone: ₹27–₹29

Near recent low of ₹26.8

RSI suggests oversold; wait for MACD reversal or price reclaiming ₹32 for confirmation

🧭 Long-Term Investment Outlook

UCOBANK is not a strong long-term candidate unless you're seeking tactical exposure to PSU banking recovery. While valuation is low and earnings are improving, ROE/ROCE remain weak, and institutional sentiment is negative.

Holding Period: 6–18 months (if already invested)

Suitable for short- to medium-term rebound plays

Monitor asset quality and NPA trends closely

🚪 Exit Strategy (If Already Holding)

Partial Exit Zone: ₹36–₹40

Near DMA 200 and psychological resistance

Full Exit

If ROE remains below 10%

If price fails to reclaim ₹32–₹34 over 2 quarters

If institutional selling accelerates

Reinvest: Only if ROE improves to 12%+, PEG remains below 0.5, and asset quality stabilizes

Would you like a comparison with stronger PSU or private sector banks that offer better long-term growth and profitability?

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