IDBI Capital has initiated coverage on Union Bank of India with a Buy rating, setting a 12-month target price of ₹187, valued at 0.88 times FY28E book-value, implying 15% upside from current levels. According to reports from NDTV Profit, the brokerage firm highlighted that Union Bank of India, India's fifth-largest PSU bank with a ₹23.8 lakh crore business, has completed one of the most compelling post-merger transformations in Indian public sector banking. The bank's strong fundamentals continue to support the positive outlook despite market dynamics.
The bank has demonstrated strong financial recovery with gross non-performing asset declining from 13.7% in FY21 to 2.82% in FY26. As reported by NDTV Profit, PAT crossed ₹18,697 crore compounding at 45% compound annual growth rate from FY21, while ROA has held above 1.2% for two consecutive years. The bank's CRAR at 18.1% is the strongest among large PSBs, indicating robust capital adequacy and continued operational strength.
Despite strong fundamentals, the stock trades at approximately 1.0x FY27E P/ABV — a material discount to peers despite a return profile that is structurally superior on most metrics. According to the brokerage report, this valuation gap presents an attractive entry point for investors seeking exposure to India's public sector banking sector, with the bank's transformation story continuing to support the positive investment thesis. The latest coverage initiation by multiple brokerages suggests significant future growth prospects for the firm.
The bank's CASA (Current Account and Savings Account) franchise build and operating leverage are identified as the twin re-rating catalysts for future performance. As reported by ETMarkets, these operational improvements are expected to drive sustained growth and margin expansion. The bank's leadership position in India's structural steel tubes market and strong demand outlook with an estimated 22% EPS growth over FY26-30 on a compounded basis further support the positive investment thesis.
