Union Bank of India is Rated Buy by MarketsMOJO

Rating Overview and Context

On 14 January 2026, MarketsMOJO revised Union Bank of India's rating from 'Hold' to 'Buy', reflecting a significant improvement in the stock's overall mojo score, which increased by 14 points to reach 78.0. This elevated score places the bank firmly in the 'Buy' category, signalling a favourable outlook for investors seeking exposure to the public sector banking segment. While the rating change date is important for historical context, the detailed analysis below focuses on the bank's current financial health and market performance as of 31 January 2026.

Current Fundamentals and Financial Strength

As of 31 January 2026, Union Bank of India demonstrates robust fundamental strength. The bank's quality grade is classified as 'good', supported by strong provisioning practices and prudent risk management. Its provision coverage ratio stands at an impressive 76.68%, indicating a solid buffer against potential non-performing assets (NPAs). The latest quarterly data reveals a gross NPA ratio of 3.06% and a net NPA ratio of just 0.51%, both among the lowest in the public sector banking space, underscoring the bank's effective asset quality management.

Financially, the bank has exhibited remarkable growth, with net profits expanding at a compound annual growth rate (CAGR) of 63.27% over the long term. This sustained profitability growth is a key driver behind the positive financial grade assigned to the stock. The credit-deposit ratio, a critical indicator of lending activity, is currently at a healthy 81.03%, reflecting strong credit growth and efficient utilisation of deposits.

Valuation Metrics and Market Performance

Union Bank of India’s valuation is considered attractive by current standards. The stock trades at a price-to-book (P/B) value of 1.1, which is reasonable relative to its peers and historical averages. This valuation level suggests that the market is pricing the bank fairly, with potential upside given its strong fundamentals. The return on assets (ROA) is 1.2%, indicating efficient use of the bank’s assets to generate profits.

Market performance has been notably strong, with the stock delivering a 62.67% return over the past year as of 31 January 2026. The year-to-date return stands at 17.46%, while the one-month and three-month returns are 18.97% and 26.91%, respectively. These figures highlight the stock's momentum and investor confidence. Despite this strong price appreciation, the bank’s profits have grown by 12.6% over the same period, resulting in a price-earnings-to-growth (PEG) ratio of 0.6, which indicates the stock may be undervalued relative to its earnings growth potential.

Technical Outlook

The technical grade for Union Bank of India is currently 'bullish'. This reflects positive price trends and momentum indicators that support the stock’s upward trajectory. The recent daily price change of +0.64% and weekly gain of 4.60% further reinforce the constructive technical setup. Investors monitoring chart patterns and volume trends will find the current technical signals encouraging for potential entry or accumulation.

What the 'Buy' Rating Means for Investors

MarketsMOJO’s 'Buy' rating on Union Bank of India suggests that the stock is expected to outperform the broader market and deliver attractive returns over the medium to long term. This recommendation is based on a comprehensive evaluation of four key parameters: quality, valuation, financial trend, and technicals. The bank’s strong asset quality, healthy profit growth, reasonable valuation, and positive technical momentum collectively support this favourable stance.

For investors, this rating implies that Union Bank of India is well-positioned to benefit from improving economic conditions, rising credit demand, and ongoing reforms in the public sector banking space. The bank’s prudent risk management and consistent earnings growth provide a cushion against volatility, making it a compelling option for those seeking exposure to large-cap financial stocks with growth potential.

Summary of Key Metrics as of 31 January 2026

• Mojo Score: 78.0 (Buy Grade)
• Provision Coverage Ratio: 76.68%
• Net Profit CAGR: 63.27%
• Gross NPA: 3.06%
• Net NPA: 0.51%
• Credit-Deposit Ratio: 81.03%
• ROA: 1.2%
• Price to Book Value: 1.1
• PEG Ratio: 0.6
• 1-Year Stock Return: 62.67%

Sector and Market Position

Union Bank of India operates within the public sector banking sector, a segment that continues to play a vital role in India's financial ecosystem. As a large-cap entity, the bank benefits from a strong market presence and government backing, which enhances its stability and growth prospects. The bank’s improving asset quality and credit growth metrics position it favourably against peers, especially in a period where economic recovery and credit demand are gaining momentum.

Investor Considerations and Risks

While the 'Buy' rating reflects a positive outlook, investors should remain mindful of sector-specific risks such as regulatory changes, interest rate fluctuations, and macroeconomic uncertainties that could impact banking operations. Additionally, the public sector banking space can be influenced by government policies and capital infusion decisions. Nonetheless, Union Bank of India’s strong provisioning and conservative risk management practices mitigate some of these concerns.

Conclusion

In summary, Union Bank of India’s current 'Buy' rating by MarketsMOJO is supported by a combination of strong quality metrics, attractive valuation, positive financial trends, and bullish technical indicators. The bank’s solid fundamentals and impressive stock performance as of 31 January 2026 make it a compelling choice for investors seeking growth and stability in the public sector banking domain. This rating serves as a guide for investors to consider Union Bank of India as a favourable addition to their portfolios, reflecting confidence in its continued upward trajectory.

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