Tag Profit Surge

Union Bank of India Shares Surge 7% on Q3
Union Bank of India Shares Surge 7% on Q3 Profit Growth and Improved Asset Quality

Union Bank of India Ltd: Overview 

Union Bank Ltd (UBL), established in 1919 and headquartered in Mumbai, is one of India’s leading public sector banks. With a legacy of over 100 years, UBI offers a wide range of banking and financial services, including retail banking, corporate banking, investment banking, and treasury operations. It has total advances of ₹9.5 trillion and deposits worth ₹12.2 trillion. The bank is listed on both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) and operates across India with a significant presence in various key cities and towns. UBI plays a crucial role in India’s banking landscape, providing financial services to individuals, small businesses, and large corporations. It has network of about 8574 bank branches and 9080+ ATMs, and is giving employment to 74300+ employees. 

The Indian banking industry is experiencing a transformation with the increasing adoption of digital banking, improved financial inclusion, and regulatory changes. Union Bank, having recently merged with Andhra Bank and Corporation Bank, is focused on strengthening its market position and expanding its digital footprint. The Indian banking sector, which has witnessed robust growth over the years, continues to face challenges such as non-performing assets (NPAs), regulatory pressures, and the need for capital adequacy. It has some branches overseas in Dubai and Sydney, helping to cater the demand there. However, the sector is poised for growth driven by expanding credit demand, digital adoption, and government-led initiatives aimed at improving financial inclusion. 

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Union Bank Ltd has showcased steady and sustained growth across its financial performance metrics. Over the past year, credit growth increased by 3.76%, deposits grew by 5.94%, and advances in the Retail, Agriculture, and MSME (RAM) segments rose by 9.26%. The bank reported an impressive 28.24% year-on-year growth in net interest income (NII), reaching ₹9,168 crore for Q3 FY25, supported by a net interest margin (NIM) of 3.08%. 

Union Bank also made significant progress in improving asset quality. The gross non-performing asset (GNPA) ratio dropped to 3.85%, and the net NPA (NNPA) ratio declined to 0.82%, reflecting improved financial health. Credit costs also fell significantly from 1.24% in December 2022 to 0.63% in December 2023. The bank’s profitability and efficiency remain robust, with return on assets at 1.30% and return on equity at 17.75%. The book value per share improved to ₹135.90, while the capital adequacy ratio (CRAR) stood at a strong 16.72%, and the CET-I ratio rose to 13.59%, marking year-on-year improvements of 169 basis points and 188 basis points, respectively. 

Union Bank’s lending activities also expanded significantly. The retail portfolio reached ₹2.02 lakh crore as of December 2024, contributing 22.11% to domestic advances. The agriculture portfolio grew to ₹1.85 lakh crore (20.30% of domestic advances), while the MSME portfolio stood at ₹1.30 lakh crore (14.29% of domestic advances). In the renewable energy sector, credit facilities worth ₹27,269 crore were extended, along with ₹645 crore sanctioned under the “Union Green Miles” initiative to promote electric vehicle financing. Additionally, the bank renewed or reviewed over 5.26 lakh accounts, demonstrating its commitment to customer-centric growth and sustainable business practices. 

Business Segments

  • Retail Banking: UBI’s retail banking division offers a comprehensive range of products and services catering to the individual needs of customers. It has shifted the focus to being more customers centric by using UPI payments, mobile banking apps, online account opening services, etc. These include savings accounts, personal loans, home loans, car loans, credit cards, and wealth management services. The bank’s extensive branch network and digital platforms allow customers to access services seamlessly, contributing to the growth of retail deposits and loans. 
  • Corporate Banking: UBI provides a wide range of services to large businesses, SMEs (small and medium enterprises), and government entities. These include working capital financing, term loans, trade finance, cash management, and project finance. It also offers loan services, ease in transactions for deals. The bank has specialized products designed to meet the unique needs of different industries, including manufacturing, services, and infrastructure.  
  • Treasury Operations: The treasury division of Union Bank manages the bank’s investments in government securities, foreign exchange, and money market instruments. The bank aims to optimize the returns from these investments while adhering to regulatory guidelines and managing risks effectively. The treasury division also plays a vital role in foreign exchange management and assists in hedging currency and interest rate risks for corporate clients. 
  • Digital & Payments Business: Digital banking is one of the core strategic pillars for Union Bank. The bank has invested heavily in digital transformation and offers a range of online and mobile banking services, enabling customers to manage their accounts, transfer funds, pay bills, and invest in financial products with ease. UBI’s initiative for this segment includes UBI mobile banking, UPI, net banking, e-wallets service, etc. 

Subsidiary Information

  • Union Bank of India (UK) Ltd: The UK-based subsidiary of UBI focuses on providing banking services to NRIs (Non-Resident Indians) and customers with business interests in the UK and Europe. The subsidiary helps UBI establish a presence in international markets and serves as a gateway for facilitating cross-border trade and investments. 
  • Union Asset Management Company Pvt Ltd: Union Asset Management Company (AMC) is the asset management arm of UBI, providing a variety of investment products such as mutual funds, exchange-traded funds (ETFs), and portfolio management services (PMS). The AMC focuses on delivering value to investors by offering diversified and professionally managed investment options. 
  • Union Bank of India (Singapore) Ltd:  Union Bank’s Singapore branch serves as a significant player in providing financial services to customers in Southeast Asia. The branch offers a range of corporate and retail banking products, including trade finance, foreign exchange, and term loans, with a particular focus on supporting Indian businesses operating in the region. 
  • Union Finance and Investment Co. Pvt Ltd: A subsidiary engaged in various financial activities, Union Finance provides services such as lending, leasing, and investment management. The company plays a role in UBI’s broader strategy of offering financial products to individuals and businesses. 
  • Union Bank of India Services Ltd:  

Q3 FY25 Earnings 

  • Revenue of ₹27135 crore in Q3 FY25 up by 6.3% YoY from ₹25521 crore in Q3 FY24.  
  • Financing Profit of ₹1274 crore in this quarter at a margin of 5% compared to 5% in Q3 FY24. 
  • Profit of ₹4623 crore in this quarter compared to a ₹3625 crore profit in Q3 FY24. 

Financial Summary 

Amount in ₹ Cr Q3 FY24 Q3 FY25 FY23 FY24 
Revenue 25521 27135 81163 100376 
Interest  16236 17756 48083 63364 
Expenses 8012 8096 36155 32422 
Financing Profit 1273 1274 -3024 4590 
Financing Margin 5% 5% -4% 5% 
Other Income 4281 4614 15915 17813 
Net Profit 3625 4623 8512 13797 
NPM 14.2% 17.1% 10.5% 13.7% 
EPS 4.9 6.1 12.5 18.1 
Patanjali Foods Q2 Results
Patanjali Foods Q2 Results: Net Profit Surges 21% to Rs 309 Crore Amid Strong Performance

Company Overview

The Patanjali Group, founded by Baba Ramdev and Acharya Balkrishna, is a prominent Indian conglomerate known for its focus on natural, Ayurvedic, and wellness-oriented products. Initially centered on Ayurveda and herbal health, the group rapidly expanded into diverse sectors, including FMCG, healthcare, food products, personal care, and education. Key brands like Patanjali Ayurved and Patanjali Foods offer a wide range of products, from food items and supplements to cosmetics and home care products. With a mission to promote traditional Indian medicine and healthy living, the Patanjali Group has become a household name, emphasizing quality, affordability, and a focus on sustainable practices.
Incorporated in 1986, Patanjali Foods Limited is a leading FMCG company in India, known for its presence across edible oils, food & FMCG, and wind power generation sectors. Originally known as Ruchi Soya Industries Limited, the company has established a strong portfolio of brands, including Patanjali, Ruchi Gold, and Nutrela, offering products at various price points to meet diverse consumer needs. Patanjali Foods is engaged in processing oil seeds, refining crude oil, and producing a variety of food products, such as biscuits and nutraceuticals. It also has a significant focus on renewable energy with wind power generation operations and maintains an extensive network of manufacturing plants across India.

Industry Outlook

For FY25, the industry outlook for Patanjali Foods appears promising, driven by growth in the FMCG and health foods sectors, a rising demand for natural and organic products, and increasing health consciousness among Indian consumers. The edible oil segment, a major contributor to Patanjali Foods’ revenue, is expected to grow due to increased consumption and demand for healthier oil alternatives. The health and wellness segment, particularly nutraceuticals, is also gaining momentum as consumers prioritize immunity and preventive health.

According to recent market reports, the FMCG sector in India is projected to grow at a compound annual growth rate (CAGR) of around 12-14% through 2025. The edible oils market, specifically, may see a CAGR of 9-10%, while the nutraceutical segment, where Patanjali Foods is expanding, is estimated to grow at a CAGR of 15-17%.

These growth rates align with Patanjali Foods’ strategy to diversify its product portfolio and increase its market share across segments. With its focus on affordable, natural, and Ayurvedic products, Patanjali Foods is well-positioned to benefit from these industry trends in FY25.

Business Segments

Patanjali Foods operates in two main business segments: Edible Oils and Food

          & FMCG.

  • Edible Oils: This segment is the largest contributor, accounting for

 approximately three-fourths of Patanjali Foods’ total revenue. In Q2 FY25,

 the Edible Oils segment experienced a 10% increase in revenue, reaching

 ₹5,939 crore, largely supported by stable demand. Branded edible oils played

 a significant role, contributing nearly 74% to this segment’s revenue. This

steady demand helped drive the overall revenue for the company to

₹8,154 crore for the quarter, reflecting an overall growth of about 4%

compared to the previous year.

  • Food & FMCG: The Food and FMCG segment, though smaller, accounted for around 25% of the total revenue in Q2 FY25. However, the segment faced challenges, with a 7% decline in revenue, attributed to sluggish demand in the broader industry. Despite this, staples like rice, pulses, and wheat performed better, with sales reaching ₹1,032 crore. The segment’s EBITDA for Q2 FY25 was ₹234 crore, reflecting some impact from the softer demand for other FMCG products​.
  • Wind power generation: Although smaller in scale, this segment generated revenue of ₹14 crore, showcasing Patanjali Foods’ commitment to sustainable energy by fulfilling 20% of its energy needs through renewable sources.

Key Subsidiaries and Their Information

Patanjali Foods Limited has several key subsidiaries that enhance its operations and product offerings, particularly in the FMCG sector and edible oils. Here are the main subsidiaries as of FY25:

  • Ruchi Soya Industries Limited: This is one of the largest subsidiaries, focusing on edible oils and food products. It significantly contributes to Patanjali Foods’ revenue through its various brands, including Ruchi Gold and Nutrela. Following its acquisition by Patanjali in 2021, Ruchi Soya has been integral to the company’s operations.
  • Patanjali Ayurved Limited: This subsidiary plays a crucial role in providing a range of Ayurvedic and herbal products. Patanjali Foods has expanded its FMCG offerings by acquiring the food business from Patanjali Ayurved, which includes a variety of consumer-focused products.
  • Patanjali Natural Biscuits Private Limited: This subsidiary is involved in the production of biscuits and snacks, further diversifying Patanjali’s product range in the FMCG sector.
  • Patanjali Wind Energy Private Limited: Engaged in wind power generation, this subsidiary contributes to the company’s sustainability efforts by utilizing renewable energy sources. In Q2 FY25, it generated revenue of ₹14 crore from this segment​.

Q2 FY25 Highlights

  • In Q2 FY25, Patanjali Foods Limited reported robust performance despite a challenging environment in both the Food & FMCG and Edible Oils segments. The company’s revenue from operations reached ₹8,154.19 crore, marking a 4.25% year-on-year (YoY) growth.
  • Patanjali Foods achieved its highest-ever EBITDA of ₹493.86 crore, reflecting a 17.81% YoY improvement. The EBITDA margin also expanded by 70 basis points to 6.06%.
  • Gross profit rose significantly from ₹1,021.26 crore to ₹1,292.81 crore, primarily due to favorable pricing scenarios in the market. The PAT increased by 21.38% YoY to ₹308.97 crore, with a corresponding margin improvement of 53 basis points.
  • There has been a noticeable shift in consumer preferences from traditional General Trade channels to modern trade, e-commerce, and quick commerce, leading to higher inventory levels among traditional partners. The company exported products to 21 countries, generating ₹34.55 crore in revenue from exports during the quarter.
  • The wind turbine power generation segment contributed ₹14.35 crore in revenue, with the company sourcing approximately 20% of its energy needs from renewable sources​.
  • During the quarter, Patanjali Foods significantly increased its advertising and sales promotion expenses, surpassing ₹130 crore, which brought the total for H1 FY25 to over ₹185 crore. The company launched various marketing campaigns across print, social media, TV, and radio, promoting specific products. Notably, celebrities such as Shilpa Shetty, Shahid Kapoor, and Khesari Lal Yadav were engaged to endorse Nutrela-branded soya chunks, edible oils, and nutraceuticals, respectively.
  • In addition to celebrity endorsements, Patanjali initiated the Rural Connect Program and Nutrela Operation Thunder to enhance brand visibility and distribution in rural, underserved markets. The brand also collaborated with popular YouTube channels like Rajshri Foods and Get Curried, featuring star chefs who showcased enticing recipes using Nutrela product.

Financial Summary

INR in Cr.Q2 FY25Q1FY25Q2FY24Q-o-Q
Growth		Y-o-Y
Growth
Total Revenue81547173782213.68%4.25%
Selling/ General/ Admin
Expenses Total		1301179110.94%43.59%
Depreciation/
Amortization		565760-0.90%-6.07%
Total Operating
Expense		77626824748713.73%3.67%
Operating Income39334933512.63%17.15%
Profit Before Tax41735933516.13%24.42%
Profit After Tax30926325517.46%21.23%
Diluted Normalized EPS8.537.267.0317.49%21.34%

SWOT Analysis

Strengths:

  1. Wide range of products
  2. Strong brand reputation
  3. Extensive reach in both rural and urban areas
  4. Solid financial performance

Weaknesses:

  1. Heavy reliance on edible oils
  2. Limited international presence
  3. High costs of raw materials

Opportunities:

  1. Rising consumer interest in health and wellness products
  2. Growth in online and modern retail channels
  3. Potential to expand into underserved rural markets

Threats:

  1. Intense market competition
  2. Regulatory hurdles
  3. Economic downturns