Union Bank of India is Rated Hold by MarketsMOJO

Understanding the Current Rating

The 'Hold' rating assigned to Union Bank of India indicates a balanced outlook where the stock is expected to perform in line with the market or sector averages over the near term. This rating suggests that investors should maintain their existing positions rather than aggressively buying or selling the stock. The assessment is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals.

Quality Assessment

As of 28 December 2025, Union Bank of India maintains a good quality grade. The bank demonstrates strong provisioning practices, with a provision coverage ratio of 76.02%, which reflects prudent risk management and a solid buffer against potential non-performing assets. Additionally, the company has exhibited robust long-term fundamental strength, with net profits growing at a compound annual growth rate (CAGR) of 65.85%. This impressive growth rate underscores the bank’s ability to expand its profitability over time despite sector challenges.

Valuation Perspective

The valuation grade for Union Bank of India is currently attractive. The stock trades at a price-to-book value of 0.9, indicating it is priced below its book value and thus potentially undervalued relative to its peers. The return on assets (ROA) stands at 1.2%, which is a healthy indicator of efficient asset utilisation. Furthermore, the company’s price-to-earnings-to-growth (PEG) ratio is 0.4, suggesting that the stock’s price growth is favourable compared to its earnings growth, making it an appealing option for value-conscious investors.

Financial Trend Analysis

The financial trend for Union Bank of India is currently negative, reflecting some recent operational challenges. The latest quarterly results for September 2025 show a significant decline in profit before tax excluding other income (PBT LESS OI) to ₹421.40 crores, down 56.8% compared to the previous four-quarter average. Net interest income (NII) also hit a quarterly low at ₹8,812.37 crores, while interest earned dropped to ₹26,650.24 crores. These figures indicate pressure on the bank’s core earnings and highlight the need for cautious monitoring of its financial trajectory.

Technical Outlook

On the technical front, Union Bank of India holds a bullish grade. The stock has demonstrated resilience and positive momentum in recent months, with a 3-month return of +12.12% and a year-to-date (YTD) gain of +24.89%. Over the past year, the stock has delivered a total return of +26.36%, outperforming the BSE500 index across multiple time frames including 3 years, 1 year, and 3 months. This technical strength suggests that market sentiment remains favourable despite some fundamental headwinds.

Stock Performance Summary

As of 28 December 2025, Union Bank of India’s stock price has experienced modest short-term fluctuations, with a 1-day decline of -0.27% and a 1-week drop of -2.43%. The 1-month return stands at -3.25%, reflecting some recent volatility. However, the longer-term performance remains robust, supported by strong fundamentals and technical momentum. The bank’s market capitalisation classifies it as a large-cap stock within the public sector banking space, with majority ownership held by promoters.

What This Rating Means for Investors

The 'Hold' rating on Union Bank of India suggests that investors should maintain their current holdings rather than initiating new positions or exiting existing ones. The bank’s attractive valuation and strong quality metrics provide a solid foundation, but the recent negative financial trends warrant caution. Investors should closely monitor upcoming quarterly results and sector developments to reassess the stock’s outlook. The bullish technical signals offer some reassurance that the stock price may continue to find support in the near term.

Conclusion

In summary, Union Bank of India’s current 'Hold' rating by MarketsMOJO reflects a nuanced view balancing strong long-term fundamentals and valuation appeal against recent financial setbacks. The stock’s market-beating returns over the past year and positive technical momentum are encouraging, yet the negative quarterly earnings trend highlights the importance of vigilance. Investors seeking exposure to public sector banks may find Union Bank of India a reasonable holding, provided they remain attentive to evolving financial performance and broader economic conditions.

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