1. At a Glance
Union Bank is punching way above its PSU weight class—₹18,813 crore TTM profit, a growing loan book, consistent margin improvement, and a stock trading at a discount to book value. Let’s just say, this isn’t your 2018 PSU bank anymore.
2. Introduction with Hook
Imagine Rocky Balboa walking into a PSU Bank boardroom. That’s Union Bank right now—bruised a decade ago, but now flexing profits like never before.
- Net Profit (TTM): ₹18,813 crore
- ROE: 17% — same ballpark as SBI, without the fanfare
- CMP/BV: 0.98x (it’s cheaper than a bank locker)
This isn’t a recovery. This is a transformation arc.
3. Business Model (WTF Do They Even Do?)
Union Bank of India is a full-spectrum PSU bank, engaged in:
- Retail banking (loans, deposits)
- Corporate banking (38% of revenue mix)
- Treasury services
- Government business (it’s a PSU after all)
- Mutual funds, insurance distribution, wealth management
Bonus points: They do merchant banking, agency services, and are present in 9+ countries. Basically, it’s SBI’s cousin who stopped procrastinating.
4. Financials Overview
| Metric | FY25 | FY24 | FY23 |
|---|---|---|---|
| Revenue | ₹1,08,417 Cr | ₹1,00,376 Cr | ₹81,163 Cr |
| Net Profit | ₹18,027 Cr | ₹13,797 Cr | ₹8,512 Cr |
| ROE | 17% | 16% | 11% |
| Net NPA | 3.52% | 4.12% | 4.77% |
| Deposits | ₹13.12 L Cr | ₹12.25 L Cr | ₹11.20 L Cr |
| Advances | ₹8.45 L Cr (Est) | ₹7.91 L Cr | ₹7.30 L Cr |
Fun fact: Profit growth over 5 years is a whopping 50.7% CAGR. PSU banks are not supposed to do that.
5. Valuation
Current Price: ₹146
Book Value: ₹149
P/E: 5.94
ROE: 17%
Dividend Yield: 3.24%
Fair Value Range (multiple valuation methods):
- P/B Method (1.2x–1.5x): ₹180–₹225
- P/E Method (6.5x–8x on FY26 EPS): ₹190–₹235
- DCF (conservative assumptions): ₹160–₹200
Final Range: ₹175–₹220
(Yes, even with PSU tag.)
6. What’s Cooking – News, Triggers, Drama
- Q1 FY26 profit up 11.87% YoY
- Net NPA down to 3.52% – lowest in 6 years
- FIIs increasing stake – from 1.43% (Sep 22) to 7.70% (June 25)
- Strong CRAR – Capital Adequacy comfortably above 14%
- Merger overhang gone – post 2020 integration with Andhra & Corporation Bank
Coming Soon:
- Aggressive digital push
- More NPA recoveries
- Government capex-led credit demand
- Potential re-rating as PSU reforms continue
7. Balance Sheet
| Item | Mar 2025 | Mar 2024 | Mar 2023 |
|---|---|---|---|
| Equity Capital | ₹7,634 Cr | ₹7,634 Cr | ₹6,835 Cr |
| Reserves | ₹1,06,200 Cr | ₹89,964 Cr | ₹71,969 Cr |
| Deposits | ₹13.12 L Cr | ₹12.24 L Cr | ₹11.20 L Cr |
| Borrowings | ₹27,490 Cr | ₹26,974 Cr | ₹42,737 Cr |
| Total Liabilities | ₹15.11 L Cr | ₹14.01 L Cr | ₹12.88 L Cr |
Highlight: Solid liability management. Borrowings down by ~35% in 3 years.
8. Cash Flow – Sab Number Game Hai
| Cash Flow | FY25 | FY24 | FY23 |
|---|---|---|---|
| Operating | ₹17,479 Cr | ₹19,930 Cr | ₹6,056 Cr |
| Investing | -₹1,891 Cr | -₹1,394 Cr | -₹2,561 Cr |
| Financing | -₹3,550 Cr | -₹11,489 Cr | -₹10,654 Cr |
| Net Cash | ₹12,038 Cr | ₹7,047 Cr | -₹7,159 Cr |
Consistently throwing off free cash. Not your usual PSU “kaam chalu, paisa gol”.
9. Ratios – Sexy or Stressy?
| Ratio | FY25 | FY24 | FY23 |
|---|---|---|---|
| ROE | 17% | 16% | 11% |
| ROA | 1.24% | 1.08% | 0.76% |
| Cost/Income | ~47% | ~49% | ~53% |
| NIM | 3.2% | 3.0% | 2.85% |
| Net NPA | 3.52% | 4.12% | 4.77% |
Verdict: Definitely on the “sexy” side of PSU banks.
10. P&L Breakdown – Show Me the Money
| Year | Revenue | Net Profit | EPS | Dividend Payout |
|---|---|---|---|---|
| FY23 | ₹81,163 Cr | ₹8,512 Cr | ₹12.45 | 24% |
| FY24 | ₹1,00,376 Cr | ₹13,797 Cr | ₹18.07 | 20% |
| FY25 | ₹1,08,417 Cr | ₹18,027 Cr | ₹23.62 | 20% |
Each year, they’re dropping double-digit profit bombs.
11. Peer Comparison
| Bank | CMP | P/E | ROE | Div Yield | Net Profit (TTM) |
|---|---|---|---|---|---|
| SBI | ₹823 | 9.5 | 17.2% | 1.93% | ₹77,573 Cr |
| PNB | ₹113 | 7.0 | 15.2% | 2.56% | ₹18,477 Cr |
| BOB | ₹244 | 6.1 | 15.5% | 3.41% | ₹20,676 Cr |
| Union Bank | ₹146 | 5.9 | 17% | 3.24% | ₹18,813 Cr |
| Canara Bank | ₹114 | 5.9 | 17.7% | 3.49% | ₹17,537 Cr |
Union is undervalued even in PSU land, with ROE >15% and lowest P/E.
12. Miscellaneous – Shareholding, Promoters
- Promoter (Govt): 74.76%
- FIIs: 7.70% (up from 1.4%)
- DIIs: 11.94%
- Public: 5.61%
No. of Shareholders: 9.6 lakh. That’s not retail. That’s a stadium.
13. EduInvesting Verdict™
Union Bank’s stock still trades like it’s stuck in 2018, but the balance sheet, profitability, and management execution scream 2025. While investors flock to shiny NBFCs and fintech IPOs, this PSU elephant has quietly become a charging bull.
Is it perfect? No.
Is it improving? Hell yes.
Is the Street catching on? Slowly, but surely.
This isn’t a PSU trade. It’s a compounding machine hiding in plain sight.
Metadata
– Written by EduInvesting Team | July 20, 2025
– Tags: Union Bank, PSU Banks, Value Investing, Bank Stocks, Earnings Q1 FY26
