Buy Union Bank, target of Rs 194: Angel

>> Tuesday, November 25, 2008

Angel Broking has recommended a buy rating Union Bank of India with a target of Rs 194 in its November 21, 2008 research report. "We believe UNBK is amongst the more profitable, efficient and competitive PSU Banks. We have a positive outlook on the bank due to traction in CASA deposit growth driven by large branch expansion plans as well as cost-efficient operations. We expect the Bank to deliver 12% CAGR in Net Profit and 24% RoE over FY2008-10E."

"At Rs 144, the stock is trading at 4.2x FY2010E EPS of Rs 34.3 and 0.9x FY2010E ABV of Rs 161.9. The stock has been trading at a median one-year forward P/ABV multiple of 1.1x since April 2002. We value the stock at 1.2x FY2010E ABV to arrive at a 12-month Target Price of Rs 194, implying an upside of 35%. We recommend a Buy on the stock," says Angel Broking's research report.