Geojit's research report on City Union Bank
CUB reported net loss of Rs.95 Cr on account of higher provision (Rs.450 Cr) due to elevated NPA and Covid-19 related concerns. Asset quality deteriorated due to high slippage during the quarter with GNPA/NNPA at 4.09%/2.29%. Total Business grew 5% YoY with Deposit growing at 6% and Advances at 5%. ROA for FY20 has declined to 1% against 1.64% as on FY19 and ROE declined from 15.25% to 9.47% during the same period. We expect ROA/ROE to be 1.5/13.1% by FY22.
Outlook
We expect that current uncertainties for FY21 are already factored and with improvement in ROA and ROE during FY22E, we value the stock at 2.0x on FY22E Adj BVPS of Rs.74.1 with a target price of Rs.148 and recommend Accumulate rating
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