UNIONBANK - Investment Analysis: Buy Signal or Bull Trap?

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

Investment Rating: 4.0

📊 Fundamental Analysis

Valuation

P/E Ratio: 5.66 vs Industry PE of 7.91 — undervalued, offering a margin of safety.

PEG Ratio: 0.11 — highly attractive, indicating strong earnings growth relative to valuation.

Price to Book: ~0.89 — trading below book value, a positive sign for value investors.

Profitability

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

ROCE: 6.72% — modest, but acceptable for a PSU bank.

EPS: ₹24.1 — solid earnings base.

Quarterly PAT Decline: ₹4,985 Cr. to ₹4,116 Cr. — slight dip, but overall profitability remains robust.

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

Debt to Equity: 11.2 — typical for banks, not concerning due to their business model.

📈 Technical & Trend Indicators

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

RSI: 59.1 — neutral to slightly bullish.

MACD: 0.21 — mild positive crossover.

Volume: Above average — strong market interest.

52W Index: Trading at ~62% of its 52-week high — decent recovery, with room for upside.

💡 Ideal Entry Price Zone

Entry Zone: ₹125–₹132**

This range aligns with 200-DMA and offers a favorable risk-reward setup.

Avoid entering above ₹140 unless earnings growth accelerates.

🧭 Exit Strategy & Holding Period

If you already hold UNIONBANK

Holding Period: 3–5 years — suitable for compounding returns and dividend income.

Exit Strategy

Fundamental Trigger: Exit if ROE drops below 12% or PEG rises above 1.0 for 2+ quarters.

Technical Trigger: Consider trimming if price nears ₹155–₹160 without earnings support.

Re-entry Zone: ₹120–₹125 with signs of improving profitability and volume support.

🧠 Final Verdict

Union Bank is a strong value-oriented long-term candidate with attractive valuation metrics, solid ROE, and a healthy dividend yield. While ROCE is modest, the overall fundamentals and technical setup favor accumulation. Best suited for investors seeking steady growth and income from the public banking sector.

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