Union Bank of India gains on board approval to raise Rs 5,000 crore

Shares of Union Bank of India jumped nearly 1.5 percent in the early trade on August 22 as the board gave the go-ahead to raise up to Rs 5,000 crore through qualified institutions placement (QIP) of equity shares.

The floor price for the QIP, which opened on August 21, has been fixed at Rs 91.10 a share

In another exchange filing, Union Bank said the board will meet again on August 24 to “consider and approve the issue price, including a discount, if any thereto” for the equity shares to be allotted to qualified institutional buyers, pursuant to the issue.

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The announcement came a month after the bank reported a 107 percent on-year rise in its standalone net profit to Rs 3,236.44 crore in the first quarter of the current financial year. The bank’s net interest income increased 16.59 percent on-year to Rs 8,840 crore.

The lender reported an improvement in the asset quality, with gross non-performing asset (NPA) ratio improving by 288 basis points (bps) and net NPA decreasing by 173 bps from the year-ago period.

One basis point is one-hundredth of a percentage point.

Also Read: Union Bank board approves raising up to Rs 5,000 crore via QIP, sets floor price

Brokerage Views

Incorporated in 1919, Union Bank of India has a market cap of Rs 62,742.07 crore. Brokerage firm Motilal Oswal is bullish on Union Bank of India and has a “buy” rating on the stock with a target price of Rs 110.

ICICI Direct also assigned a “buy” call with a target price of Rs 102, from the coverage price of Rs 87.35 in a recent report. Its analysts expect the stock to reach the target in three months. They recommend stop loss at Rs 82.

The stock has given a return of 35.65 percent over the past six months, outperforming the benchmark Nifty Bank index, which has gained 10.02 percent during the period.

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