Union Bank of India’s Q1 Results: A Mixed Bag of Performance and Market Reaction

Union Bank of India, a prominent player in the Indian banking sector, recently disclosed its financial results for the first quarter of the fiscal year 2025-2026. The bank reported a 12% year-on-year increase in its net profit, reaching Rs 4,116 crore. This growth in profit was accompanied by a 17.44% sequential rise in net profit, indicating a robust performance compared to the previous quarter.

Despite these positive financial results, the bank’s stock experienced a 3% drop on July 21, 2025, following the announcement. The shares fell to an intraday low of ₹141, reflecting investor concerns over certain aspects of the bank’s performance. The decline was attributed to a weaker-than-expected performance in core pre-provision operating profit (PPoP), which missed estimates by 17.5%. This shortfall was primarily due to lower fees and net interest income (NII), compounded by the absence of priority sector lending (PSL) income opportunities in the quarter, following changes in gold loan regulations.

However, not all analysts shared a pessimistic view. Research reports from Prabhudas Lilladher and Anand Rathi offered a more optimistic outlook. Prabhudas Lilladher maintained a “buy” rating on Union Bank of India, setting a target price of Rs 150. They acknowledged the weak quarter but suggested potential for recovery. Anand Rathi was even more bullish, setting a target price of Rs 168. They highlighted the bank’s decent overall operating performance, with a cost-to-income ratio below 50%, and noted improvements in headline asset quality and provision coverage ratio (PCR).

In terms of operational segments, Union Bank of India’s Retail, Agri, and MSME (RAM) segment is expected to grow by 10-15% in the current financial year, as stated by Executive Director Nitesh Rajan. This growth is anticipated to continue in the double-digit range, reflecting the bank’s strategic focus on these sectors.

The bank’s earnings call for the quarter ended June 30, 2025, was also made available to the public, providing further insights into its financial health and strategic direction.

Overall, while Union Bank of India’s Q1 results showcased strong profit growth, the market reaction highlighted concerns over certain operational challenges. Nonetheless, the positive outlook from some analysts suggests potential for recovery and growth in the coming quarters.