This PSU Bank Stock Has Doubled Shareholders Money in Last 6 Months; Do you Own?

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UCO Bank Share Price: Shares of public sector lender UCO Bank are on a roll with the stock more than doubling in the last six months.  This state-owned banking stock has been in base building mode after climbing to its 52-week high of Rs 38.15 apiece on NSE in mid December 2022. After ushering in 2023, UCO Bank share price has shed more than 15 per cent in YTD time. However, despite sliding from Rs 38.15 to Rs 26.15 in 2023, this PSU bank stock has delivered 120 per cent return to its shareholders in last six months.

According to stock market experts, UCO Bank shares skyrocketed on privatisation buzz and this would be the first national bank that will be privatised. However, nothing concrete announcement has come from the government’s side. They said that the rise in UCO bank share price is completely speculative but its NIMs are improving due to the high interest rate regime.

The shares of UCO Bank hit a 52-week high of Rs 38.15 on December 16, 2022 and a 52 week low of Rs 10.52 on June 20, 2022.

The lender reported a strong set of earnings in the December quarter.

In the third quarter of the current fiscal, UCO Bank reported a 110 per cent rise in profit to Rs 652.97 crore against Rs 310.39 crore in the corresponding quarter of the previous fiscal. Further, net profit for the three quarters that ended December rose to Rs1,281 crore.

UCO Bank’s net profits during Q3 and the first three-quarters of FY23 were the highest ever in the 80 years of the Bank’s history, it said in a regulatory filing on Tuesday.

Net Interest Income (NII) in the last quarter rose to Rs1,951.87 crore as against Rs 1,762.61 crore same quarter last year, clocking a year-on-year growth of 10.74 per cent.

Net non-performing assets (NPAs) fell to Rs 2,406.90 crore (1.66 per cent of total advances) at the end of December 2022 from Rs 3,333.59 crore (2.81 per cent of total advances) as of 2021.

Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher said, “The stock has given a spectacular rally from October 2022 to December 2022 period gaining almost 230% and thereafter has witnessed some profit booking to slide gradually to current level of Rs 25. A 50% retracement level near 24 zone would be the next major support level for the stock where we can expect for some consolidation and anticipate for a pullback recovery. The levels near Rs 25 would be crucial support and a decisive breach further below would turn the overall trend weak. At the same time, a prominent move above Rs 29 zone would regain the strength for further rise and improve the bias.”

Ravi Singhal, CEO, GCL said, “Due to high rise in interest rates by central banks, their NIMs has improved and NPAs provisioning has also come down. Further growth depends on advances. Our target for UCO Bank is Rs 55 in the next few months.”

Ravi Singh, Vice President and Head of Research, Share India said, “UCO Bank has rallied after delivering financial results with a reduction in NPAs. The loan growth has jumped by almost double digits. Going ahead, Indian banks will gain from tailwind of rising rates as credit growth stays steady and will be a growth propeller in the rest of the fiscal year as high credit growth and stronger margins helped boost earnings. On the technical setup, UCO Bank share price is holding strong with high volumes on daily and weekly chart. As per the momentum indicators, tt may touch the target of Rs 32 in near term.”

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