Can Union Bank maintain its momentum after a 13% stock surge?

Synopsis

The indebtedness publication grew by 9.5% to ₹9.5 lakh crore portion deposits roseate by 7.2% to ₹13.1 lakh crore year-on-year compared with 6.7% and 3.8% maturation successful the erstwhile quarter, respectively. Credit maturation was buoyed by 22.1% summation successful retail indebtedness publication and 12.5% emergence successful the micro, small, and mean enterprises (MSME).

ET Intelligence Group: The banal of Union Bank of India has gained 13% successful 3 trading sessions since the slope declared beardown maturation successful the 4th fourth nett past Thursday led by little provisioning, unchangeable margins, and higher different income. The nationalist assemblage slope reported improving asset quality during the 4th amid traction successful retail recognition growth. Analysts person maintained a "buy" standing connected the banal with 12-14% upside. The bank's recognition and deposit maturation picked up during the March 4th pursuing little maturation successful the erstwhile quarter.

The indebtedness publication grew by 9.5% to ₹9.5 lakh crore portion deposits roseate by 7.2% to ₹13.1 lakh crore year-on-year compared with 6.7% and 3.8% maturation successful the erstwhile quarter, respectively. Credit maturation was buoyed by 22.1% summation successful retail indebtedness publication and 12.5% emergence successful the micro, small, and mean enterprises (MSME).

Agencies

"With a cleaner equilibrium sheet, capable superior and beardown deposit base, we expect recognition maturation for the slope to reflector strategy recognition maturation successful the mean term," stated Anand Rathi Research successful a report.

Fresh slippages accrued sequentially to ₹2,483 crore from ₹1,820 crore owed to a crisp 52% and 56% leap successful slippages of agriculture and MSME categories.

Despite this, the gross nonperforming plus (NPA) ratio shrank sequentially to 3.6% from 3.9% owed to moderation successful the retail and firm class and improved recoveries. The bank's gross NPA has fallen importantly implicit the past fewer quarters from 7.5% successful the March 2022 quarter. The bank's absorption expects slippages to mean successful the coming quarters.

Net involvement income (NII) roseate by humble 0.8% to ₹9,514 crore year-on-year successful the March 2025 quarter. However, higher different income and little taxation outgo aided 50.6% summation successful net profit astatine ₹4,984.9 crore.

The slope showed resilience connected the borderline beforehand contempt moderating involvement complaint rhythm and helped by sequentially little outgo of funds. Net involvement borderline (NIM) fell by 4 ground points sequentially and 22 ground points year-on-year to 2.87%. In the adjacent term, portion the involvement complaint connected floating complaint assets volition mean owed to the 50 ground points chopped successful the repo rate, deposit rates volition beryllium revised downwards with a lag. This is apt to enactment unit connected NIM, which the slope expects to mitigate done progressive deposit outgo management.

"Credit costs person been nether control, and with steadfast plus quality, they are expected to stay benign," mentioned Motilal Oswal Financial Services successful a report.

The brokerage expects the slope to present instrumentality connected assets of 1,1% and instrumentality connected equity of 15.2% by FY27. It has reiterated a "buy" connected the banal with a people terms of ₹145, implying an FY27 guardant price-book aggregate of 0.9. The banal was past traded astatine ₹130.7 connected Tuesday connected the BSE.

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