Expect United Bank of India to trade in range of Rs 73-81:IFCI Financial

MUMBAI: IFCI Financial Services is of the view that at upper price band of Rs 66, United Bank of India trades at Rs 0.8xABV 1HFY10. The brokerage expects it to trade in the range of Rs 73-81.

“Due to the restructuring of share capital book value has improved significantly from Rs 14.93 as on FY09 end to Rs 94.5 in 1HFY10. However, we value banking stocks on ABV which is Rs 81.2 for 1HFY10 for UnBI.

At the upper price band of Rs 66 it trades at Rs 0.8x ABV 1HFY10 of Rs 81.2 while its peers are trading in the range of 0.9 to 3.0x ABV.

On the valuation front we expect the stock to trade in a range of 0.9 -1.0x ABV giving a price range of Rs 73-81. However, the business performance requires a lot of improvement to trade above 1x P/ABV,” the recommendation said.