Brokerages have a divided opinion on the stock with regards to the road ahead after its results.
Analysts from Kotak Institutional Equities have a “buy” rating on the stock, while those from UBS have a “neutral” rating.
Kotak Institutional Equities
The brokerage has a price target of ₹210 per share on the stock, indicating an upside of 16.9% from its previous close, with a “buy” rating.
It said Union Bank’s earnings increased 7% from the previous year, led by 30% decline in provisions from the last year. Meanwhile, its pre-provision operating profit (PPOP) grew 3% and return on assets stood at 1.4% and return on equity at 17%.
The brokerage said Union Bank’s loan growth is tracking well at 10%, but surplus liquidity seems to be exhausted, with liquid cash ratio of 113%.
It said it likes the lender for its profitability profile and palatable valuation.
UBS
UBS has a “neutral” rating on Union Bank with a price target of ₹195 per share, indicating a 7.7% upside from its previous close.
It said the fourth quarter profit after tax (PAT) was beat driven by lower opex and provisions, while its net interest income (NII) remained weak.
UBS expects the lender’s NIMs to witness stable to slightly improving trends, supported by a continued repricing of deposits. It has estimated an average return on assets (RoA) and return on equities (RoE) of 1.1% and 14%, respectively, over Financial Year 2027-2029.
The stock is at 1x its estimated FY27 price-to-book value and appears fairly priced given its lower growth but stable margins and higher earnings profile, UBS said.
In an interaction with CNBC-TV18, the management of Union Bank said that they are confident that the Net Interest Margins (NIMs) have bottomed out and they are expecting improvement to around 2.7% going forward.
The lender said that the ₹700 crore provision can be seen as a proactive prudential measure and a forward looking move by the bank, stating that it is prudent to build buffers and keep aside provisions when times are good. The bank expects credit costs for the new year to be below 1%.
Shares of Union Bank are trading 2.4% lower on Friday at ₹175.4. The stock has given up all the gains made in the last one month but is still up 14% so far in 2026.
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