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The market expects Union Bank of India to carry on much as it has.
At today’s share price, buyers are assuming Union Bank of India earns about 13.1% a year on the money invested in it, from here on. Over the last ten years it actually earned about 15.2% a year. The two are close, so the share price does not need the business to improve or to stumble. It needs it to keep doing roughly what it already does.
- How it is valued: Excess return — the correct lens for a bank.
- What the price assumes: 13.1% return on equity, against 15.2% the model takes from its own record.
- Ten-year record: Between FY2019 and FY2026, Union Bank of India's revenue went from ₹39,355 crore to ₹1,28,400 crore — it compounded at about 18% a year over 7 years.
- Biggest swing factor: Credit costs. Main risk: Asset quality.
01Three banks in one
Union Bank of India, founded in Mumbai in 1919, is one of India's largest public-sector banks and is majority-owned by the Government of India. In April 2020 it merged with Andhra Bank and Corporation Bank, roughly doubling its size.
Like other state banks it went through heavy bad-loan provisions in the late 2010s; since the merger, lower credit costs have lifted profit.
02What the market is assuming
Work backwards from today's share price and you can see what buyers are quietly taking for granted. Here is the return on equity that price implies for Union Bank of India, next to what the model assumes from the company's own record.
The further apart these two numbers are, the bigger the bet a buyer at today's price is making.
03Union Bank of India's record, in plain numbers
Between FY2019 and FY2026, Union Bank of India's revenue went from ₹39,355 crore to ₹1,28,400 crore — it compounded at about 18% a year over 7 years. It reported a net loss in FY2019 and FY2020, and closed the period with net profit of ₹18,781 crore. In FY2026 it kept 14.6% of revenue as net profit — its best year in the period. Revenue slipped 1.2% in the latest year, well behind its own long-run pace. FY2022 is missing from the filed series used here, so that year is left out rather than estimated.
Revenue and earnings per share in ₹, return on equity and leverage as ratios — all from the filed statements.
Revenue and net profit by year (₹ crore)
| Year | Revenue | Net profit | Margin |
|---|---|---|---|
| FY2018 | 38,414 | 22,478 | 58.5% |
| FY2019 | 39,355 | -2,933 | -7.5% |
| FY2020 | 43,268 | -3,041 | -7.0% |
| FY2021 | 83,211 | 2,828 | 3.4% |
| FY2023 | 97,079 | 8,430 | 8.7% |
| FY2024 | 1,18,188 | 13,709 | 11.6% |
| FY2025 | 1,29,979 | 17,921 | 13.8% |
| FY2026 | 1,28,400 | 18,781 | 14.6% |
04How Union Bank of India gets valued — and why
Excess return — the correct lens for a bankA bank is not valued with a discounted cash flow. Deposits are its raw material and interest is operating income, so enterprise value means nothing here. It is valued on excess return instead — the profit it earns above the cost of the equity funding it.
05What decides Union Bank of India's value
Credit costs
Lower provisions drove the recovery.
Return on equity
Whether returns hold through the next cycle.
Deposit franchise
A wide branch network gives access to deposits.
Integration
Merger savings support efficiency.
06What could go wrong
- Asset quality. A new credit downturn would hit profit.
- Policy lending. Government priorities shape lending.
- Capital. Growth may need fresh equity.
07What the full Union Bank valuation shows
Sign in free to see the complete Union Bank of India valuation
- ✓Fair value per share — from the excess-return model banks are valued on
- ✓The bank workpaper — book value, cost of equity and sustainable return, step by step
- ✓Bull, base and bear cases — and exactly which assumptions move between them
- ✓Peer comparison — against SBI, Bank of Baroda and PNB
- ✓Downloadable report — the full write-up, yours to keep
08Questions people ask about Union Bank of India
Which banks merged into Union Bank of India?
Andhra Bank and Corporation Bank, in April 2020.
Why do state banks trade at low price-to-book?
Historically lower and more volatile returns on equity.
How is Union Bank valued?
On excess return: what it earns above its cost of equity.
Is Union Bank of India overvalued?
At ₹203 the market is pricing in roughly 13.1% sustained ROE, against the ~15.2% its own record supports. That is less than it has delivered — on these numbers the market is asking the business for less than its own record, which usually means it doubts the record repeats.
What is the intrinsic value of Union Bank of India?
It is computed from the filed financial statements using the method that fits this business (excess return), with every assumption shown alongside the result. The per-share figure and the full working are in the report.
How much debt does Union Bank of India carry?
Debt to equity stands at 0.62, against 0.30 at the start of the period — the balance sheet is a core input to the cost of capital used here.