Union Bank of India's shares saw a nearly 1.5% increase in early trade on August 22 following the board's green light for raising up to Rs 5,000 crore through a qualified institutions placement (QIP) of equity shares. The QIP, which commenced on August 21, has set a floor price of Rs 91.10 per share. The bank announced that the board will reconvene on August 24 to determine the issue price, including any potential discount, for the equity shares allotted to qualified institutional buyers.
This development comes on the heels of the bank reporting an impressive 107% year-on-year surge in standalone net profit, reaching Rs 3,236.44 crore, during the first quarter of the current financial year. The bank's net interest income also exhibited robust growth, climbing by 16.59% year-on-year to reach Rs 8,840 crore. Union Bank of India has demonstrated improvement in asset quality as well, with the gross non-performing asset (NPA) ratio improving by 288 basis points (bps) and the net NPA decreasing by 173 bps compared to the previous year.
Established in 1919, Union Bank of India holds a market capitalization of Rs 62,742.07 crore. Leading brokerage firm Motilal Oswal holds a bullish view on the bank, assigning it a "buy" rating with a target price of Rs 110. Similarly, ICICI Direct issued a "buy" call with a target price of Rs 102, with analysts expecting the stock to achieve this target within three months and recommending a stop loss at Rs 82.
Over the past six months, the stock has delivered a remarkable return of 35.65%, surpassing the benchmark Nifty Bank index's gain of 10.02% during the same period. The QIP move reflects Union Bank of India's strategic efforts to enhance its financial position and capitalize on its recent positive performance.
