Why Is Anand Rathi Bullish on Union Bank of India With a Target of ₹208?
About Union Bank of India
🔹 Union Bank of India is a large public sector bank with a diversified loan book across retail, MSME, agriculture, and corporate segments.
🔹 The bank has undergone a multi-year balance sheet clean-up and is now in a phase of improving profitability and growth normalization.
🔹 Focus remains on retail-led growth, deposit franchise strengthening, and sustainable asset quality.
Anand Rathi has initiated a Buy recommendation on Union Bank of India with a target price of ₹208, citing steady improvement in asset quality, healthy credit growth, and margin resilience.
Healthy Asset Quality Trends
🔹 Gross slippages at 78 bps and net slippages at just 6 bps.
🔹 Credit costs remain well controlled, supporting earnings stability.
🔹 Recovery momentum continues, reducing stress from legacy assets.
Low net slippages indicate that incremental stress formation is limited, a key positive for PSU banks after years of elevated asset quality concerns.
Credit Growth Momentum
🔹 Sequential credit growth of around 200 bps.
🔹 Growth driven largely by retail lending.
🔹 MSME and agriculture segments also showing gradual traction.
Retail-led growth typically carries lower risk-adjusted returns and better granularity, which supports long-term balance sheet stability.
Deposit Franchise and CASA Improvement
🔹 CASA ratio improved by 145 bps year-on-year.
🔹 Better CASA mix helps contain cost of deposits.
🔹 Supports net interest margins in a competitive rate environment.
An improving CASA ratio is particularly important for PSU banks as it directly strengthens margins without taking incremental credit risk.
For traders tracking PSU banks through index and derivative strategies, Nifty Tip and BankNifty Tip are often used to align sector moves with broader market trends.
Operating Performance Snapshot
🔹 Core operating performance largely in line with estimates.
🔹 Margins showing gradual improvement.
🔹 Fee income remains stable, aiding non-interest revenue.
The consistency in operating metrics suggests that earnings growth is becoming more predictable, a key requirement for valuation re-rating.
Why Anand Rathi Sees Upside
🔹 Improving balance sheet quality.
🔹 Retail-led credit growth visibility.
🔹 Better CASA and margin sustainability.
🔹 Attractive valuation compared with large private banks.
As PSU banks transition from clean-up mode to growth mode, Union Bank of India stands out due to its improving fundamentals and relatively lower valuation base.
Investor Takeaway: Derivative Pro & Nifty Expert Gulshan Khera, CFP®, believes Union Bank of India represents a classic PSU bank turnaround story—where asset quality repair, deposit improvement, and retail credit growth are converging. While execution risks remain, the risk-reward appears favorable at current levels for investors with a medium-term perspective. For more structured market insights, read free content at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on Union Bank of India
🔹 Is Union Bank of India a turnaround PSU bank?
🔹 How important is CASA improvement for bank valuations?
🔹 Are PSU banks still undervalued?
🔹 What drives credit growth in public sector banks?
🔹 How to interpret brokerage Buy ratings?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
