Sell Union Bank of India, target price Rs 25: Emkay Global

Emkay Global has given a sell rating to Union Bank with a target price of Rs 25. The share price moved up by 3.28 per cent from its previous close of Rs 30.45. The stock’s last traded price is Rs 31.45.

Union Bank of India, incorporated in the year 1919, is a banking company (having a market cap of Rs 19957.32 Crore).

Financials
For the quarter ended 30-06-2020, the company reported a Consolidated Interest Income of Rs 12453.80 Crore, up 98.38 % from last quarter Interest Income of Rs 6277.87 Crore and up 102.61 % from last year same quarter Interest Income of Rs 6146.75 Crore. The bank reported net profit after tax of Rs 332.49 Crore in latest quarter.

U bank-graph

Investment Rationale
The brokerage maintains a Sell rating with a revised TP of Rs25 (based on 0.5x Sep’FY22E ABV of merged bank) and UW stance in sector EAP, mainly due to its relatively weak asset quality profile, subdued return ratios and merger overhang.

Promoter/FII Holdings
Promoters held 89.1 per cent stake in the company as of June 30, 2020, while FIIs held 0.8 per cent, DIIs 5 per cent and public and others 5.1 per cent.