Banking stocks have been doing really well these days because of the huge profits posted each and every quarter. Most minimum kind of growth seen in the banks are 20% YoY which is really good. My first pick from the banking sector would be Union Bank, a PSU. Union Bank has been doing extremely well, posting a decent growth each and every quarter.

Financial Results

FY06 reported net sales of 5,683 crores and a net profit of 675 crores. FY10 reported net sales of 13,300 crores and a net profit of 2,074 crores. Net sales grew 2.25 times and net profit grew more than 3 times. These are really good figures if you ask me. FY10 shows that net profit is more than 15% of the total sales turn over, way above 10%.

On Quarterly basis, June10 results showed a profit jump of 36% YoY, Excellent. September Quarter is expected to grow 20%+ YoY basis, another interesting figure expected this quarter.

Stock Pricing

Speaking about the stock price, current market capital stands at 21,000 crores and FY10 net profit is close to 2100 crores makes the ratio come to around 10%, another reason to cheer. But the bank’s profit is rising at 20-40% YoY basis which will mean, we can assume the profits to be around 2,600 crores at least in FY11. If the net profit has to stay at a 10% ratio to market capital. We can safely assume that by end of FY11, we can see targets of 520+.

Buy Union Bank with targets of 520.

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