Union Bank of India's Q4 Profit Soars by 50%; Brokerages Issue BUY Recommendation with ₹145 Target Price.
PSU Stock: Following a de-escalation in tensions between India and Pakistan, a positive sentiment prevails in the domestic stock markets. Amidst this, Union Bank of India has showcased impressive performance in the January-March quarter of fiscal year 2024-25, registering a remarkable 50% growth. The bank's net profit reached ₹4,985 crore, compared to ₹3,311 crore in the same quarter of the previous fiscal year.
The bank's total income also increased to ₹33,254 crore, up from ₹31,058 crore in the corresponding period last year. Following these b results, several brokerage firms have recommended investing in Union Bank and set a target price of ₹145.
Brokerage Firms' Views on Union Bank's Results
Motilal Oswal, a brokerage firm, described Union Bank of India's results as stable and positive. The firm attributes the robust profit growth to improvements in other income and the benefit of lower tax rates.
However, the brokerage also cautioned that the bank's net interest margin (NIM) might be impacted by potential policy rate cuts and cost pressures. Despite this, considering the bank's b fundamentals, Motilal Oswal maintained a 'BUY' rating on Union Bank's stock with a target price of ₹145.
Similarly, Prabhudas Lilladher (PL Capital) reiterated its 'BUY' rating for Union Bank. The brokerage firm, which previously had a target price of ₹140, has now revised it upward to ₹145. The firm highlights Union Bank's b performance in the fourth quarter, driven by improvements in net interest income (NII), fee income, and asset quality. Furthermore, the bank's balance sheet appears robust, suggesting continued stable growth.
Union Bank Stock Performance and Valuation
Union Bank of India's stock is currently trading at a discount of approximately 28% from its 52-week high. Its 52-week high is ₹172.45, and the low is ₹100.75. The stock has witnessed a slight upward trend in recent months, with an increase of around 10% in the last month.
Over a three-month period, it has risen by 11.26%, and over six months, it has increased by 7.56%. However, the stock has declined by 10% over a one-year period. On the other hand, it has delivered impressive returns of 79.35% over two years and 435.56% over five years. Brokerage firms believe the stock still holds an upside potential of approximately 18%.
Current Market Conditions
A positive sentiment has emerged in the domestic stock markets following a recent ceasefire agreement between India and Pakistan. The Nifty50 and Sensex have also opened bly. Previously, escalating tensions between the two countries had led to market declines, but the improved situation is restoring investor confidence. In this environment, PSU banks with b fundamentals like Union Bank are seen as opportunities for investors.
However, market volatility remains a possibility. Investors are advised to assess their risk appetite and consult with their financial advisor before making any investment decisions.
