Shares of UCO Bank are expected to remain in focus as the state-owned lender launches a ₹2,000 crore Qualified Institutional Placement (QIP) on March 24. The issue is priced at ₹34.2 per share, which is at a discount compared to the bank’s previous closing price.
In the past six months, UCO Bank’s stock has dropped more than 20%, underperforming the broader market. During the same period, the Nifty 50 index dropped only 9%, indicating the bank’s weak performance in the market.
Despite this, UCO Bank has reported a strong Q3FY25 performance with a 27% year-on-year growth in net profit. The bank’s net profit rose to ₹639 crore from ₹502 crore in Q3FY24.
The bank’s Net Interest Income (NII) also rose 19.6% YoY to ₹2,377 crore, while total income rose 15% YoY to ₹7,406 crore, demonstrating sustained improvement in its financial health.
The asset quality also improved with Gross Non-Performing Assets (GNPA) falling to 2.91% from 3.18% of the previous quarter. Net NPAs also fell to 0.63%, reflecting better credit management.
Looking forward, UCO Bank has maintained a positive outlook for FY25, projecting:
- 8-10% deposit growth
- 12-14% credit growth
- Slippage ratio between 1-1.25%
- Credit costs below 1%
- GNPA and NNPA below 3% and 0.65%, respectively
Market analysts believe that strong Retail, Agriculture, and MSME (RAM) credit growth will drive UCO Bank’s long-term performance. Additionally, corporate credit growth is expected to support further improvements in the bank’s valuation, making it a stock to watch in the coming months.
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Source: Moneycontrol.
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