Edelweiss Securities has maintained 'Buy' on Union Bank of India with target price of Rs 155 as against current market price (CMP) of Rs 135 in its report.

Commenting on the investment rationale, the stock broker said, ''Union Bank of India's (UNBK) Q4FY14 PAT of Rs 5.8 billion was higher than our estimated Rs 4.6 billion, primarily due to tax reversal of Rs 1.8 billion. However, operating profit declined 22% YoY given sticky opex increase of 29% YoY despite slowdown in revenue traction - a function of business consolidation (loan growth at mere 10% YoY) and lower margins (full year NIMs down 40bps YoY to 2.6%).

Other highlights were slippage at Rs 12 billion (2.2%) saw stablising trend with 88% of it being lumpy in nature; however, restructuring was higher at Rs 14.4 billion taking impaired assets to 9.5%, albeit higher than its historical but lower than peers.

Although sticky opex and higher capital requirement (core Tier 1 - 7.18%) remain key monitorables, current valuation of 0.7x FY16E ABV - 1x standard deviation below five-year average - and better-than-peers stressed pool provides comfort. We maintain 'Buy' with target price of Rs 155 (based on 0.8x FY16 P/ABV).''

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