Religare Capital has maintained 'Sell' on Union Bank of India after the company declared its first quarter results. The stock broker revised price target to Rs 145 from Rs 135 earlier.
Commenting on the results, Religare Capital said, ''UNBK's Q1FY16 PAT declined by 22% year-on-year to Rs 5.2 billion as NII remained flat at Rs 21.3 billion while provisions increased by 64% year-on-year. Slippages were high at Rs 15 billion, but stressed asset formation declined 42% quarter-on-quarter to Rs 23 billion as fresh restructuring was down from Rs 23.7 billion in Q4FY15 to Rs 7.5 billion.''
Commenting on the investment rationale, ''We expect profitability to remain under pressure and anticipate frequent equity dilution as the bank raises capital to comply with Basel III norms (CET 1 only 7.2%). We roll over to a new Sep’16 TP of Rs 145 from Rs 135 and maintain SELL.''
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