Union Bank’s stock target price slashed

Macquarie has cut price target of Union Bank to 225 rupees from 260 rupees and maintains ‘neutral’ rating after it reported a lower than expected net profit for the September quarter on worse than expected asset quality.

In 2Q12,the company increased its loan exposure to stressed sectors like textiles and gems and jewellery,and commercial real estate to a lesser extent,which we find a source of worry,Macquarie said in a note.

Non-performing loans (NPAs) for the bank were at 18 billion rupees,of which 7 billion rupees came from agriculture-related accounts and 4 billion rupees from some poverty alleviation schemes-related lending,it said.

At 9.22 a.m.,shares were at 211.30 rupees,down 0.38 percent.

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