Wednesday, 29 October 2008

Buy Union Bank, target of Rs 225: Motilal Oswal

Motilal Oswal has maintained its buy rating on Union Bank of India with a target of Rs 225 in its October 27, 2008 research report. "NII grew 49% YoY to Rs 9.8 billion on the back of the strong improvement in margins and 26% YoY growth in loans. We are impressed by the core operating performance in 2QFY09 and expect the strong trend to continue. NII growth, cost of funds and margin movements are encouraging. Asset quality has improved significantly and would enable lower provisions ahead."

"We are upgrading our estimates by 5% for FY09 and FY10. We expect the bank to report EPS of Rs 31 and Rs 36 in FY09 and FY10. We expect BV to be Rs135 in FY09 and Rs164 in FY10. The stock is trading at 4x FY09E EPS and 0.9x FY09E BV. RoE would remain strong at 24%+ over next two years. Maintain Buy, target of Rs 225," says Motilal Oswal's research report.

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Source: Moneycontrol

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