Union Bank Shares Tumble 7% After Q1 Business Update; Lower-Than-Expected Advances Weigh on Sentiment

Shares of Union Bank of India witnessed sharp selling pressure on Friday after the public sector lender released its business update for the first quarter of FY27.

Investors React to Gap Between Provisional and Final Loan Growth Figures Despite Healthy Annual Performance

Shares of Union Bank of India witnessed sharp selling pressure on Friday after the public sector lender released its business update for the first quarter of FY27. The stock plunged more than 7% during intraday trading as investors reacted to lower-than-expected gross advances compared with the provisional figures announced earlier.

While the bank continued to report double-digit year-on-year growth in its loan book and deposits, the significant revision from provisional numbers triggered concerns about the pace of business growth. The decline also reflected cautious sentiment across the PSU banking space ahead of the upcoming June quarter earnings season.

Union Bank Share Price Falls Despite Strong Annual Growth

Union Bank shares fell as much as 7.3% to an intraday low of ₹161.60 on the National Stock Exchange (NSE). The stock later recovered part of the losses and was trading around ₹162.90, down nearly 3.8%, by late morning.

The decline came even as the broader market remained positive. The Nifty 50 traded higher during the session, while the Nifty PSU Bank Index slipped, indicating sector-specific selling pressure.

Over the past week, Union Bank shares have fallen around 6.5%, although the stock continues to remain positive on a year-to-date basis with gains of over 6%. The lender's shares had touched a 52-week high of ₹205.49 earlier this year, while the 52-week low stands at ₹124.64.

Q1 Business Update Disappoints the Street

According to the bank's business update for the quarter ended June 2026, total gross advances increased 12.5% year-on-year to ₹9.74 lakh crore. However, the figure was significantly below the provisional gross advances of ₹10.96 lakh crore reported earlier, disappointing market participants.

Similarly, domestic advances rose 13.11% YoY to ₹9.38 lakh crore, compared with the provisional estimate of ₹10.61 lakh crore.

On the deposits front, the bank reported healthy growth, with Domestic CASA deposits rising 11.7% year-on-year to ₹4.03 lakh crore, reflecting continued strength in its low-cost deposit base.

Although the annual growth numbers remained healthy, investors were primarily concerned about the downward revision in the loan book figures, leading to a sharp correction in the stock.

Analysts Expect PSU Banks to Remain Range-Bound

Market experts believe the reaction reflects investor caution rather than a deterioration in the bank's fundamentals.

According to Kranthi Bathini, Director – Equity Strategy at WealthMills Securities, the business update indicates slower-than-anticipated growth, which has affected investor confidence.

He expects PSU banking stocks to remain in a consolidation phase until companies announce their detailed Q1 FY27 financial results, when investors will get greater clarity on profitability, margins and asset quality.

Motilal Oswal Maintains Neutral Rating

Brokerage firm Motilal Oswal Financial Services has retained its 'Neutral' rating on Union Bank despite the recent decline.

The brokerage expects the bank to report:

Operating Profit: ₹7,246.7 crore, up around 4.9% YoY
Net Profit: ₹4,484.7 crore, representing nearly 9% YoY growth
Net Interest Margin (NIM): Around 2.6%, with a marginal contraction of four basis points quarter-on-quarter
Healthy quarterly credit growth and gradual improvement in asset quality, although credit costs may inch higher.

The brokerage has assigned a target price of ₹190, suggesting an upside potential of nearly 17% from the current market price.

Key Factors to Watch in Q1 Results

Investors will closely monitor several operational metrics when Union Bank announces its June quarter earnings, including:

Growth in retail, MSME and corporate lending.
Net Interest Margin (NIM) trends amid changing interest rates.
Asset quality indicators, including Gross and Net NPAs.
Slippage ratio and provisioning requirements.
Deposit growth and CASA ratio.
Management's guidance on FY27 credit growth and profitability.

Strong earnings and stable asset quality could help restore investor confidence despite the recent correction.

Outlook for Union Bank Stock

The sharp decline in Union Bank shares appears to be driven more by disappointment over the lower-than-expected business update than by any major deterioration in the bank's financial health. The lender continues to report double-digit annual growth in advances and deposits, while analysts expect steady earnings growth and improving asset quality.

However, with the banking sector entering the Q1 earnings season, investors are likely to remain cautious until greater clarity emerges on margins, loan growth and credit costs. Any positive surprise in the upcoming results could support a recovery in the stock, while weaker-than-expected earnings may keep the shares under pressure in the near term.