Union Bank of India is Rated Hold

Current Rating and Its Significance

MarketsMOJO currently assigns Union Bank of India a 'Hold' rating, reflecting a balanced outlook on the stock. This rating suggests that investors should maintain their existing positions rather than aggressively buying or selling. The 'Hold' status indicates that while the stock demonstrates certain strengths, there are also areas of caution that temper enthusiasm for immediate accumulation.

The rating was revised on 04 Nov 2025, when the Mojo Score decreased from 72 to 64, moving the grade from 'Buy' to 'Hold'. This adjustment reflects a reassessment of the bank’s fundamentals, valuation, financial trends, and technical indicators. Importantly, all data and returns referenced here are as of 09 January 2026, ensuring investors receive the latest insights.

Quality Assessment: Solid Fundamentals Amid Challenges

Union Bank of India maintains a good quality grade, supported by robust provisioning practices and long-term profit growth. As of 09 January 2026, the bank’s provision coverage ratio stands at a strong 76.02%, indicating prudent risk management and a healthy buffer against potential loan losses. This is a critical metric for public sector banks, which often face asset quality pressures.

Moreover, the bank has demonstrated impressive long-term fundamental strength, with net profits growing at a compound annual growth rate (CAGR) of 65.85%. This growth trajectory highlights the bank’s ability to expand its core earnings over time, a positive sign for investors seeking stability and growth in the public sector banking space.

However, recent quarterly results have shown some softness. The September 2025 quarter recorded the lowest figures in key income metrics: Net Interest Income (NII) at ₹8,812.37 crore, Interest Earned at ₹26,650.24 crore, and Profit Before Depreciation, Interest and Taxes (PBDIT) at ₹1,818.13 crore. These figures suggest near-term headwinds that investors should monitor closely.

Valuation: Attractive Pricing Supports the Hold Rating

Union Bank of India’s valuation remains attractive as of 09 January 2026. The stock trades at a price-to-book (P/B) value of approximately 1, which is in line with its historical averages and peer valuations. This fair pricing implies that the market is neither overly optimistic nor pessimistic about the bank’s prospects.

The return on assets (ROA) stands at 1.2%, a respectable figure for a public sector bank, reflecting efficient utilisation of assets to generate profits. Additionally, the company’s price/earnings to growth (PEG) ratio is 0.4, signalling that the stock may be undervalued relative to its earnings growth potential. This valuation backdrop supports the 'Hold' rating, suggesting limited downside risk but also restrained upside in the near term.

Financial Trend: Mixed Signals from Recent Performance

The financial trend for Union Bank of India is currently negative, primarily due to the subdued quarterly results noted above. Despite the strong long-term profit growth, the latest data shows a dip in key income streams, which has weighed on the overall financial momentum.

Nevertheless, the stock’s returns over various time frames remain impressive. As of 09 January 2026, the stock has delivered a 52.17% return over the past year, outperforming the BSE500 index across one year, three years, and three months. Year-to-date returns stand at 6.96%, with a one-month gain of 9.41% and a three-month increase of 19.38%. These figures indicate that the market continues to reward the stock despite recent earnings softness.

Technicals: Bullish Momentum Supports Stability

From a technical perspective, Union Bank of India is rated bullish. The stock’s recent price action shows positive momentum, with a one-day gain of 1.98% and a one-week increase of 4.91%. This technical strength suggests that investor sentiment remains constructive, providing a supportive backdrop for the stock’s price stability.

Technical indicators often reflect market psychology and can signal potential entry or exit points. In this case, the bullish technical grade complements the 'Hold' rating by indicating that while the stock is not a strong buy, it is well positioned to maintain its current levels or potentially appreciate moderately in the near term.

Summary for Investors

Union Bank of India’s 'Hold' rating by MarketsMOJO reflects a nuanced view of the stock’s prospects. The bank exhibits strong quality fundamentals and attractive valuation metrics, balanced against recent financial softness and a cautious outlook on near-term earnings. The bullish technical stance adds a layer of confidence for investors holding the stock.

For investors, this rating suggests maintaining current holdings while monitoring upcoming quarterly results and sector developments. The stock’s market-beating returns over the past year and longer term highlight its potential as a steady performer within the public sector banking space, but the recent dip in financial metrics advises prudence.

Company Profile and Market Position

Union Bank of India is a large-cap public sector bank with a significant presence in the Indian banking industry. Majority ownership rests with promoters, reflecting government backing and strategic importance. The bank’s market capitalisation and sector positioning make it a key player in the public sector banking segment.

Its strong provisioning and long-term profit growth underpin its resilience, while the attractive valuation and bullish technicals provide a foundation for steady performance. Investors should weigh these factors alongside the recent financial challenges to form a comprehensive view.

Outlook and Considerations

Looking ahead, Union Bank of India’s ability to sustain profit growth and improve quarterly income metrics will be critical. The bank’s provisioning strength offers a cushion against asset quality risks, but the negative financial trend signals the need for cautious optimism.

Investors should also consider broader macroeconomic factors affecting the banking sector, including interest rate movements, credit demand, and regulatory changes. The 'Hold' rating reflects these complexities, advising a balanced approach rather than aggressive accumulation or divestment.

Conclusion

In summary, Union Bank of India’s current 'Hold' rating by MarketsMOJO, last updated on 04 Nov 2025, is supported by a combination of good quality fundamentals, attractive valuation, negative recent financial trends, and bullish technical indicators. As of 09 January 2026, the stock presents a compelling case for investors to maintain their positions while monitoring developments closely. This measured stance aligns with the bank’s mixed signals and market performance, offering a prudent path forward in a dynamic sector.

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