Is Union Bank (I) overvalued or undervalued?

As of 30 April 2025, the valuation grade for Union Bank of India has moved from attractive to very attractive, indicating a significant positive shift in its perceived value. The company is currently deemed undervalued, supported by a PE ratio of 6.51, a Price to Book Value of 1.04, and an impressive PEG ratio of 0.20. These ratios suggest that the stock is trading at a discount compared to its earnings growth potential.
In comparison to its peers, Union Bank stands out with its low PE ratio, while other banks in the sector may have higher valuations. For instance, if we consider similar institutions, the average PE ratio tends to hover around 10-12, which further emphasizes Union Bank's undervaluation. Additionally, the bank's recent performance has outpaced the Sensex, with a year-to-date return of 29.46% compared to the Sensex's 5.58%, reinforcing the attractiveness of its current valuation.