Union Bank of India: Target Price of Rs 180 Set by Motilal Oswal

Union Bank of India Posts Strong 4QFY26 Results, Beats Estimates

Union Bank of India (UNBK) announced its fourth quarter (4Q) fiscal year 2026 (FY26) profit after tax (PAT) of INR53.2 billion, representing a 7% year-over-year (YoY) and 6% quarter-over-quarter (QoQ) increase. This performance was primarily driven by non-performing asset (NPA) recoveries and lower operational expenses (opex).

However, the bank's net interest income (NII) declined by 1.1% YoY and rose 0.8% QoQ to INR94.1 billion, falling short of expectations by 2%. The net interest margin (NIM) contracted to 2.64% in 4QFY26, down 12 basis points from the previous quarter, and below the Motilal Oswal Financial Services Limited (MOFSLe) estimate of 2.72%. The NIM contraction was largely attributed to the transmission of the repo rate cut.

Key Performance Indicators for 4QFY26

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In its outlook, Motilal Oswal has fine-tuned its estimates and projects a return on assets (RoA) and return on equity (RoE) of 1.1% and 13.9%, respectively, for fiscal year 2027 (FY27). The research firm expects the bank's loans to expand at a compound annual growth rate (CAGR) of 10.5% over FY26-28. Based on these projections, the research firm reiterates its Neutral rating on the stock with a target price of INR180 (1.0x September 2027 estimated adjusted book value).